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Taking a number of steps back, extremely rated 3m CP have traded 43bp above to OIS on common in 2008-09 with peaks nicely above 100bp in 2008. Much has modified since then but compared, the BoE target levels seem designed to stem any aggressive widening of CP spreads, and therefore papercp an increase in corporate funding prices. We would assume that £1bn hardly covers the money wants of large companies with a major loss in income and in CP market entry, however.
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1. Unsecured notes issued by companies and maturing inside nine months. Typically, commercial paper is issued only by the bigger and more credit score worthy corporations. A business paper is a handy means of short-term fund acquisition for the companies and profitable short-term funding for the investor.
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