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Corporate America Embraces Short-Term IOUs as Free Money Ends

  • Issuance of commercial paper has grown 20% since 2020
  • Corporations cut back on longer-term corporate bond sales
Employees assist customers at an Apple Inc. store in Munich, Germany, on Saturday, June 10, 2022.

Employees assist customers at an Apple Inc. store in Munich, Germany, on Saturday, June 10, 2022.

Photographer: Krisztian Bocsi/Bloomberg
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Blue-chip companies that need to borrow in the US now are increasingly relying on commercial paper to avoid locking in longer-term borrowing costs in a market beset by turbulence

With the Federal Reserve poised for a fresh hike Wednesday, the days when blue-chip firms borrow super cheaply for decades are gone, at least for now. Corporate treasurers have instead been turning more to commercial paper, a type of unsecured debt that typically lasts 270 days or less.