Friday, 19 October 2007

ABCP market continues to evaporate

Total Commercial paper outstanding has actually risen in the last few weeks thanks to an increase in Financial and Non-financial paper. However the Asset Backed Commercial paper market continues to evaporate, albeit at a much slower rate.

I last wrote about the Commercial paper market 4 weeks ago. Since then Non-Financial paper outstanding has dropped $5 billion, Financial paper has outstanding has risen $36 billion whilst Asset Backed paper outstanding has dropped $41.1 billion. In the last week the ABCP market shed $11 billion.

It is no coincidence that the timing of the 'super' conduit proposal to buy assets from the bank's distressed SIV's is occurring just as a large amount of debt is coming due for those same SIV's in November.

It would appear Citibank has deep enough pockets to fund there SIV's for the immediate future but it will still be interesting to see if there are any major changes to the Commercial paper market in November as that debt comes due.