March 30, 2017 / 3:07 PM / 5 months ago

UPDATE 1-U.S. commercial paper supply posts biggest weekly rise since Dec

 (Adds background, details)
    NEW YORK, March 30 (Reuters) - The amount of U.S. commercial
paper outstanding recorded its largest weekly increase but
remained below the $1 trillion mark amid muted demand from money
market funds, Federal Reserve data released on Thursday showed.
    U.S. seasonally adjusted commercial paper (CP) outstanding
rose $18.2 billion to $983.9 billion in the week ended March 29.
This was the biggest gain since a $20.5 billion increase in the
week ended Dec. 28.
    Companies issue CP to raise cash to finance inventories and
payrolls, while financial institutions use proceeds from this
short-term debt to fund trades.
    Assets of prime money funds, which had been major buyers of
commercial paper, have not recovered after losing about $1
trillion last year from conversions into government-only funds
and investors withdrawing money from them due to stricter
regulations.
    Institutional prime money funds lost $463.8 million in
assets to $141.8 billion in the week ended March 28, while
retail prime funds gained $87.9 million to $253.7 billion,
according to iMoneynet.             
    Last October, seasonally adjusted commercial paper
outstanding hit its lowest in at least 16 years at $902.9
billion.             
    However, non-seasonally adjusted commercial paper
outstanding, which some analysts consider a more reliable
reading than the seasonally adjusted one since it has been
distorted by the financial crisis, fell $3.6 billion to $975.7
billion.

 (Reporting by Richard Leong; Editing by James Dalgleish)
  

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