logo
  Join        Login             Stock Quote

Name The Largest Credit Market In The US

 February 07, 2013 04:07 PM


It turns out that the biggest financing market is not in corporate bonds or even mortgages. It's trade receivables. According to the Receivables Exchange, $11 trillion of trade receivables is originated by small and mid-size businesses and another $6 trillion by large corporations, for a whopping total market size of $17 trillion.
Source: The Receivables Exchange

[Related -Four Stocks in the Dow Making Fresh 52 Week Lows]

As US money market funds are squeezed by new regulation, the types of commercial paper (CP) these funds can buy is limited to the top-rated corporations and banks. The smaller or lower rated firms have limited or no access to the CP markets. And banks sometimes have a limited appetite to finance corporate receivables on their balance sheets. By opening up receivables financing to end-users directly, the exchange effectively creates an alternative to CP or money markets for investors to park their cash. The receivables term tends to be quite short (typically under 2 months), but there is clearly credit risk associated with these transactions. Many of these firms are smaller and/or sub-investment-grade or unrated - so credit work needs to be done prior to investing. One way to mitigate the risk is by pooling these receivables (effectively disintermediating money market funds) to create diversification which is what the exchange allows investors to do (see presentation below).

[Related -Some Thoughts on Greece’s Don’t-Call-It-a-Default]

Trade Receivables CRP Buyer Presentation Feb 2013

SoberLook.com
From our sponsor:
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageFour Stocks in the Dow Making Fresh 52 Week Lows

“What gets weak tends to get weaker; what gets strong tends to get read on...

article imageGreece And The Cemetery For Your Wealth

The Greek default is merely the opening act of the worst sovereign-debt crisis in history. By the time it read on...

article imageAll Signs Point To Higher Gold Prices

In the face of historic monetary stimulus from nearly every major central bank in the world over the past read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Greece And The Cemetery For Your Wealth
More Articles on: Finance



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.