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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (431238)	10/30/2008 12:03:12 PM
From: Road Walker	Read Replies (3) \| Respond to of 1572580

Nice.... looks like one thing the Fed is doing is working: Bloomberg News, sent from my iPhone. U.S. Commercial Paper Soars Most on Record as Fed Becomes Buyer Oct. 30 (Bloomberg) -- Corporate borrowing in the commercial paper market soared the most on record after the Federal Reserve began buying the debt directly from issuers. U.S. commercial paper outstanding rose by $100.5 billion, or 6.9 percent, to a seasonally adjusted $1.55 trillion for the week ended Oct. 29, the Fed said today in Washington. It was the first gain in seven weeks, reversing a 20 percent decline during the previous six weeks. Financial paper led this week's gain, rising $69.4 billion, or 12.4 percent, to $628.8 billion. ``The introduction of the commercial paper program is an enormous jolt of not just liquidity but stimulus to the economy,'' Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey, said in a Bloomberg Television interview. Clearbrook manages about $20 billion. American Express Co., the biggest U.S. credit-card company, and General Electric Co. are among dozens of companies that sold commercial paper to the Fed since the central bank launched the program on Oct. 27 to unlock the short-term debt market. Commercial paper issuance seized up after Lehman Brothers Holdings Inc. filed for bankruptcy last month, raising concern among investors that even the biggest banks may fail. Sales of commercial paper due in more than 80 days totaled more than $171 billion in the program's first three days, compared with $33.5 billion all of last week and $115.9 billion in the previous six weeks combined, Fed data show. Issuance reached a record $67.1 billion on its first day, compared with a daily average of $6.7 billion last week, according to Fed data. Bank Issuers Financial issuers that had been mostly shut out of the market for anything but overnight commercial paper were among the biggest sellers of longer-term paper this week. Top-rated financial companies sold $39.8 billion of debt due in more than 80 days in the last three days, including $28.2 billion yesterday, compared with a daily average of about $134 million since the Lehman bankruptcy filing on Sept. 15. ``This is good news for issuers, as it will relieve strains associated with having to issue more frequently,'' Tony Crescenzi, chief bond-market strategist at Miller Tabak %26 Co. LLC in New York, said in a note to clients. ``Issuers are now `locked in' to funding and can go about the normal functioning of their businesses without having the burden of corporate finance hanging over their heads.' Units of GMAC LLC, Chrysler LLC and Ford Motor Co., and New York-based Morgan Stanley have also registered to issue paper to the Fed. The Fed announced the program on Oct. 7. The interest rate the Fed charges to buy commercial paper fell today after the central bank slashed its target lending rate by half a percentage point to 1 percent, matching a half-century low. Fed's Rate The Fed set the rate it's willing to accept for 90-day unsecured commercial paper at 2.74 percent, including a credit surcharge, down 0.1 percentage point. The rate on paper backed by assets such as auto loans and credit cards fell the same amount to 3.74 percent. The rates are set under the Fed's Commercial Paper Funding Facility and are available on CPFF. ``The CP market continued to benefit from the Commercial Paper Funding Facility that went into effect this week,'' Bank of America Corp. analysts led by Hans Mikkelsen in New York said yesterday in a report. Money-market investors began fleeing the commercial paper market after the Lehman bankruptcy, forcing many companies to roll the debt daily or leave the market and prompting others to lock in alternative financing. Verizon Communications Inc., the second-largest U.S. phone company, and Estee Lauder Cos. both began offering corporate bonds today to repay commercial paper. 90-Day Paper Quoted rates on 90-day commercial paper, which matures in 270 days or less, fell 0.03 percentage point today to a six-week low of 3.09 percent, according to yields offered by companies and compiled by Bloomberg. Rates on the highest-ranked commercial paper due in 30 days rose 0.27 percentage point to 2.41 percent. Overnight rates fell 0.15 percentage point to 0.35 percent, the lowest on record. The Fed's 90-day unsecured commercial paper rate is 1.74 percent and is comprised of the overnight indexed swap rate plus 1 percentage point. Companies that don't post collateral must pay an additional 1 percentage point. To contact the reporter on this story: Bryan Keogh in New York at bkeogh4@bloomberg.net Find out more about Bloomberg on iPhone: bbiphone.bloomberg.com