commercial paper meaning

  "commercial paper" in a sentence
Noun: commercial paper  ku'murshul 'peypu(r)
  1. An unsecured and unregistered short-term obligation issued by an institutional borrower to investors who have temporarily idle cash

Derived forms: commercial papers

Type of: cash equivalent

Encyclopedia: Commercial paper

noun [U]

(Finance )

a method that a large company, bank, etc. can use to borrow money from investors, usually for a period of less than a year. The lender cannot take the assets of the company if the loan is not repaid:

222 companies had issued sterling commercial paper.

❖ to default on/issue commercial paper

A relatively low-risk short-term (maturing at 60 days or less in the US but longer in the UK) unsecured form of borrowing. Commercial paper is often regarded as a reasonable substitute for Treasury bills, certificates of deposit, etc. The main issuers are large creditworthy institutions, such as insurance companies, bank trust departments, and pension funds. In the UK, sterling commercial paper was first issued in 1986. Commercial paper is now available in Australia, France, Hong Kong, The Netherlands, Singapore, Spain, and Sweden.

Short-term unsecured promissory notes issued by a corporation. The maturity of commercial paper is typically less than 270 days; the most common maturity range is 30 to 50 days or less.

Bills of exchange (drafts), promissory notes, bank checks, and other negotiable instruments for the payment of money, which are such instruments by virtue of their form.


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