SIC Code 6159-03 - Commercial Paper

Commercial Paper is a financial instrument used by corporations to raise short-term funds. It is an unsecured promissory note that is issued by a company and sold to investors at a discount to its face value. The maturity of commercial paper ranges from a few days to a maximum of 270 days. The interest rate on commercial paper is typically lower than other forms of short-term borrowing, making it an attractive option for companies looking to raise funds quickly and at a lower cost. Commercial paper is typically issued by large, creditworthy corporations with a strong credit rating. The funds raised through the issuance of commercial paper are used to finance a range of short-term needs, such as inventory purchases, payroll, and accounts payable. Commercial paper is often used as an alternative to bank loans, which can be more expensive and time-consuming to obtain. Investors in commercial paper include money market funds, corporations, and other institutional investors. Commercial paper is considered a safe investment because it is typically issued by financially stable companies with a strong credit rating. However, like all investments, there is a risk of default, although this risk is generally considered low. The commercial paper market is an important source of short-term funding for corporations, and it plays a vital role in the overall functioning of the financial system. The market for commercial paper is highly liquid, with a range of investors and issuers participating in the market on a daily basis.