Commercial Paper
Corporate Credit Analysis glossary · Corporate Credit Analysis
Definition
Unsecured short-term debt instrument, typically with maturity under 270 days, issued by high-quality borrowers (usually A-1/P-1 short-term rated) as a money-market funding source.
Commercial Paper in plain English
Commercial paper is a super-short-term IOU that big, trusted companies use to borrow money for a few days or months — almost always paid back in under 270 days. Because it's used by very reliable borrowers, it usually isn't backed by any specific collateral; investors lend on the strength of the company's top-notch credit rating alone. It's like a rock-solid friend borrowing $20 until payday — you don't ask for anything as security because you fully trust they'll repay soon. Companies use it as a cheap, quick way to cover everyday cash needs like payroll or inventory.
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