Commercial paper crunch

“July 16 (Bloomberg) — The U.S.commercial paper market, the cheapest source of corporate cash, is shrinking at a record pace, raising the cost of capital for borrowers from Consolidated Edison Inc.to Kellogg Co. The market for company debt due within nine months has plunged 26 percent since April 8 to $1.1 trillion, its worst three months everFederal Reserve data show…Proposals from the U.S. Securities and Exchange Commission in June may worsen the slump by restricting money-market funds, which hold 40 percent of the paper, to only top-rated debt. That would force more companies to sell bonds that may cost an extra 8 percentage points in interest, or $8 million a year for every $100 million borrowed.”

Only top rated debt??

Worst three months ever??

Restricting money market funds is the right idea.

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