Commercial Paper (CP)

Corporate bearer debentures issued by a corporation or bank to provide issued to finance its short-term credit needs, such as accounts receivable and inventory. Maturities ranges from seven days to two years (generally 30-90 days). The notes are not publicly quoted. Commercial Paper is available in a wide range of denominations, can be either discounted or interest-bearing, and usually has a limited or non-existent secondary market. The minimum volume is EUR 0.5 million. Commercial Paper is usually issued by entities with high credit ratings. Their tradability in comparison to other money market investments makes them attractive. They are a principal component of money market fund portfolios because of its high yield.