Commercial paper is an unsecured form of promissory note that pays a fixed rate of interest. It is typically issued by large banks or corporations to cover short-term receivables and meet short-term financial obligations, such as funding for a new project.
Also question is, is commercial paper subject to interest rate risk?
Commercial paper is short-term, unsecured debt issued by corporations. Firms use this money to finance operations, because rates are usually cheaper than those for their long-term debt. … Lower-rated commercial paper typically means more risk and less demand.
Additionally, what is the interest rate for commercial paper? The FIMMDA India Commercial Paper rates for the three-month index show ‘A1+’ paper can be issued at 6.96%. In early March, ‘A1+’ CPs were being issued at an interest rate of 9.137%. The total outstanding of CPs stood at Rs 3.86 lakh crore as on August 15.