Fed sets rates for commercial paper

The Federal Reserve has set rates for its purchases of asset-backed commercial paper at 3.88%.

The central bank’s new commercial-paper-funding facility, announced in early October (InvestmentNews, Oct. 7),

made its debut yesterday. It is designed to provide a vehicle that will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers.

The program is administered by the Federal Reserve Bank of New York and allows U.S. issuers to access unsecured commercial paper for 1.88% plus a 1-percentage-point surcharge.

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