7 Things To Consider For Commercial Paper Programs

Helpful tips for issuing Commercial Paper for newbies

1. If a large funding amount is needed it may be helpful to take a few days to build the balance. Make sure you utilize all of your dealers.

2. A large rolling overnight CP issuance practice can cause liquidity risk in a stressed market.

3. Cash that is investable decreases as the day goes on so the earlier you communicate to the dealers what you need the more opportunity you will have to get your CP issued. Since the beginning of Covid, many people have been working from home and executing transactions earlier.

4. Pick a rate that is fair when you post your CP. When you post rates that are below the market rate you will most likely have to raise them later in the day and end up paying more to get the trade done.

5. The more dates you offer for you CP to mature on the more likely you will place the CP trades.

6. In the morning dealers are busy talking to multiple people.The best time to call you dealer is in the afternoon if you want to have a long discussion about the market, rates, and strategy.

7. Pay attention to FOMC meetings. If the Fed lowers or raises the federal funds rate the CP market will directly be impacted.