Papel comercial

What Is Papel comercial?

Papel comercial, or commercial paper (CP), is a widely used, unsecured, short-term debt instrument issued by corporations to meet their immediate financing needs. It falls under the broader category of instrumentos de deuda de corto plazo within the mercado de dinero. Essentially, it's a promissory note, a written promise by an emisor to repay a specified amount on a future date. Companies issue papel comercial to fund operational expenses such as payroll, inventory, and accounts payable, often finding it a more cost-effective alternative to traditional bank loans. Typically, only large corporations with strong calificación crediticia can issue papel comercial due to its unsecured nature. The maturity of papel comercial is usually less than 270 days, which often exempts it from registration with the U.S. Securities and Exchange Commission (SEC), reducing issuance costs and delays.
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History and Origin

The concept of commercial credit, in the form of promissory notes issued by corporations, dates back to at least the 19th century in the United States. Early forms of what we now recognize as commercial paper were used to finance trade, predating a formal banking system in America. These instruments, akin to domestic bills of exchange, facilitated safe transfers of funds and provided short-term loans.
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A significant figure in the development of the modern commercial paper market was Marcus Goldman, founder of Goldman Sachs, who began trading commercial paper in New York in 1869. His firm became a major dealer in this market following the Civil War. ¹³Over time, the market evolved from one used by a broader range of firms with varying credit qualities to one dominated by large corporations and finance companies with excellent credit ratings. The market experienced strong growth in the 1960s and 1970s, reaching a peak of $2.2 trillion before the 2008 financial crisis. ¹²The Federal Reserve has also historically engaged with commercial paper, trading it alongside Treasury bills at various times to manage monetary reserves.

Key Takeaways

Papel comercial is an unsecured, short-term debt instrument issued by corporations.
It is primarily used for short-term operational funding, such as payroll and inventory.
Most papel comercial matures in less than 270 days, avoiding SEC registration requirements.
It is typically issued at a descuento from its face value.
Only companies with high credit ratings can usually issue papel comercial at favorable rates.

Formula and Calculation

Papel comercial is typically issued at a discount, meaning the investor pays less than the valor nominal and receives the full face value at maturity. The effective interest rate or rendimiento can be calculated using the following formula:

\text{Yield} = \left( \frac{\text{Face Value} - \text{Purchase Price}}{\text{Purchase Price}} \right) \times \left( \frac{360}{\text{Days to Maturity}} \right)

Where:

Face Value: The amount the investor will receive at the plazo de vencimiento.
Purchase Price: The discounted price at which the investor buys the papel comercial.
Days to Maturity: The number of days remaining until the papel comercial matures.
360: Used to annualize the yield (commercial paper often uses a 360-day year convention).

Interpreting the Papel comercial

The yield on papel comercial reflects the issuer's riesgo de crédito and prevailing tasa de interés in the money market. A lower yield generally indicates that the market perceives the issuer as highly creditworthy, demanding less compensation for the risk of lending short-term funds. Conversely, a higher yield might signal increased perceived risk or tighter market conditions. Investors typically view prime commercial paper as a very safe inversión because the financial stability of high-quality issuing companies is generally predictable over short periods.

Hypothetical Example

Imagine TechCorp, a large technology company, needs €50 million for 60 days to cover a temporary cash shortfall for an upcoming payroll. Instead of taking a bank loan, they decide to issue papel comercial.

Issuance: TechCorp issues €50,000,000 (face value) of papel comercial with a 60-day maturity.
Discount Rate: Due to TechCorp's excellent credit rating, the market offers a discount rate that translates to a purchase price of €49,750,000 for investors.
Investor Purchase: A money market fund purchases this papel comercial for €49,750,000.
Maturity: After 60 days, TechCorp repays the money market fund €50,000,000 (the face value).
Return: The money market fund earns €250,000 (€50,000,000 - €49,750,000) on its 60-day inversión.

Using the formula:

\text{Yield} = \left( \frac{50,000,000 - 49,750,000}{49,750,000} \right) \times \left( \frac{360}{60} \right)

\text{Yield} = \left( \frac{250,000}{49,750,000} \right) \times 6

\text{Yield} \approx 0.005025 \times 6 \approx 0.03015 \text{ or } 3.015\%

This hypothetical example illustrates how the investor receives a return from the discount at which the papel comercial is purchased.

Practical Applications

Papel comercial is a cornerstone of short-term financiamiento for large, creditworthy corporations and financial institutions. It is used to manage liquidez and bridge gaps between cash inflows and outflows. Companies utilize it for working capital needs, such as funding accounts receivable, purchasing raw materials, and covering payroll. Financial institutio¹¹ns also issue papel comercial to fund various lending activities.

The commercial pape¹⁰r market also plays a crucial role in broader financial stability. For instance, during periods of market stress, central banks, like the Federal Reserve, may intervene to support the functioning of the commercial paper market. In 2008, amid the financial crisis, the Federal Reserve established the Commercial Paper Funding Facility (CPFF) to provide a liquidity backstop to U.S. issuers of commercial paper, thereby ensuring the continued flow of credit to businesses and households. More recently, U.S. ⁸, ⁹commercial paper volumes have fluctuated, with recent data showing a contraction in outstanding amounts.

Limitations and ⁶, ⁷Criticisms

While generally considered a low-risk deuda instrument, papel comercial is not without limitations or criticisms. Its unsecured nature means that it is not backed by specific assets, making the issuer's creditworthiness paramount. If an issuing company faces financial distress, investors may incur losses.

A significant vulnerability of the commercial paper market was exposed during the 2008 financial crisis. The market experienced considerable strain as money market mutual funds and other investors became increasingly reluctant to purchase commercial paper, particularly longer-dated maturities, leading to a sharp decline in outstanding volumes and a significant increase in interest rates. This disruption was ⁵exacerbated by the failure of Lehman Brothers, which caused a large money market fund with exposure to Lehman's commercial paper to "break the buck," triggering a run on other money market funds. The crisis highlight⁴ed how a perceived lack of liquidez and rising riesgo de crédito can quickly freeze even seemingly safe markets, underscoring the interconnectedness of financial instruments.

Papel comercial v³s. Pagaré

While both pagaré (promissory notes) and papel comercial are forms of unsecured short-term debt, key distinctions exist. A pagaré is a general term for a written promise to pay a specific amount to a specific person on demand or at a specified future date. It can be issued by individuals or businesses for various purposes, including personal loans or smaller business transactions, and may or may not be easily transferable. Papel comercial, by contrast, is a specific type of pagaré typically issued by large corporations for short-term financiamiento in the open market. It is designed to be highly negotiable and sold to institutional investors, often at a descuento, and usually carries a high calificación crediticia. The main confusion arises because papel comercial is, by definition, a type of promissory note, but its specific market characteristics, issuance methods, and target investors set it apart from a generic pagaré.

FAQs

What is the typical maturity of papel comercial?

The typical plazo de vencimiento for papel comercial is short, usually ranging from a few days to 270 days. This duration is significant because in the United States, debt instruments maturing within 270 days are generally exempt from SEC registration.

Who issues papel comercial?

Papel comercial is primarily issued by large, financially stable corporations, financial institutions, and sometimes municipalities. These entities generally have strong calificación crediticia, which allows them to borrow at favorable rates without collateral.

Why do companies use pa²pel comercial instead of bank loans?

Companies often prefer papel comercial because it can be a lower-cost alternative to traditional bank loans, especially for large, creditworthy emisors. It also offers flexibility in terms of maturity and can be issued quickly to meet immediate financiamiento needs.

Is papel comercial a se¹cured or unsecured debt?

Papel comercial is an unsecured form of deuda. This means it is not backed by any specific collateral or assets of the issuing company. Its value is based solely on the issuer's promise to pay and its perceived creditworthiness.