Definition: Commercial paper is an unsecured, short-term loan given by a corporation rather than a bank. The funds from the loans, typically used by companies, are issued in denominations of $100,000 or more. Under normal circumstances these are safe investments because a company's financial situation can be predicted over a few months. But corporations have recently grown fearful of purchasing these loans because of the likelihood that they are backed by failing subprime mortgages.
Usage: "Forty-five percent of large U.S. companies say they are finding fewer buyers for their commercial paper, according to new research from Greenwich Associates.
And more than 70 percent of the 291 companies surveyed say their cost of issuing the short-term debt is increasing, including 22 percent reporting it is up "significantly." (CFO.com Oct. 3, 2008)