Highlighting the credit crunch, commercial paper short-term notes that companies issue to finance their operations fell by $62.8 billion, the third consecutive week of steep decline, according to data from the Federal Reserve. Between Aug. 9 and Aug. 29, commercial paper dropped by a total $244.1 billion to $1.98 trillion, a decline not seen since the Nasdaq market bubble started bursting in 2000, analysts said. Companies typically turn to commercial paper, which bears a maximum duration of 270 days and does not require regulatory registration, for their routine financing.
The bulk of the weeks decline, $59.4 billion, came from asset-backed commercial paper, in particular involving mortgages. For the past three weeks, asset-backed commercial paper fell by $184.9 billion.