NEW YORK, March 7 The supply of U.S. commercial paper recorded its biggest weekly decline in more than two years on reduced demand from money market funds and companies favoring longer-term debt to raise money.
U.S. seasonally adjusted commercial paper outstanding fell $42.5 billion to $1.021 trillion in the week ended March 6 - the lowest level since late November, Federal Reserve data released on Thursday showed.
The decline in commercial paper outstanding was the largest since the $44.3 billion fall recorded in the week ended Dec 1, 2010.
Companies raise short-term cash by selling commercial paper to money market funds and other investors to finance inventories, payrolls and other daily operations.
Non-seasonally adjusted commercial paper outstanding, which some analysts consider more reliable than seasonally adjusted since it has been distorted by the financial crisis, also fell sharply on the week, down $36.3 billion to $1.031 trillion.
U.S. non-seasonally adjusted commercial paper outstanding from foreign financial companies fell $9.4 billion to $230.8 billion in the latest week.
Money market mutual funds, which are buyers of commercial paper, have experienced withdrawals in recent weeks, as investors scooped up stocks and other higher-yielding investments on expectations of continued easy monetary policy from the Federal Reserve and encouraging domestic economic data.
U.S. money market fund assets decreased by $17.50 billion to $2.634 trillion in the week ended March 5, the Money Fund Report said on Wednesday.
On the supply front, the U.S. high-grade corporate bond market has priced $16.67 billion worth of securities after $26.68 billion worth of supply last week, according to IFR, a unit of Thomson Reuters.