"Commercial Paper Shrinks at Record Pace" writes Bloomberg. The article says, "The U.S. commercial paper market, the cheapest source of corporate cash, is shrinking at a record pace, raising the cost of capital for borrowers from Consolidated Edison Inc. to Kellogg Co. The market for company debt due within nine months has plunged 26 percent since April 8 to $1.1 trillion, its worst three months ever, Federal Reserve data show. Investor demand for all but top-rated commercial paper, or CP, evaporated after September's collapse of the $62.5 billion Reserve Primary Fund sparked a run on money-market accounts, and as the recession sapped companies' need for short-term credit to expand." It adds, "Proposals from the U.S. Securities and Exchange Commission in June may worsen the slump by restricting money-market funds, which hold 40 percent of the paper, to only top-rated debt. That would force more companies to sell bonds that may cost an extra 8 percentage points in interest, or $8 million a year for every $100 million borrowed." See also, ICI's weekly "Money Market Mutual Fund Assets", which show money funds falling $21.13 billion to $3.647 trillion in the week ended July 15.
