A Wall Street Journal article, entitled, "Firms Find Short is Beautiful," reports on the increase in non-financial commercial paper issuance recently. The piece says, "Apple Inc. and at least a dozen other companies have started borrowing short-term cash at the fastest pace in almost two years, telegraphing economic growth. Last month, companies with the highest credit ratings sold an average of $5.88 billion of commercial paper a day, according to the Federal Reserve. For the first time in about two decades, corporate commercial paper accounts for a quarter of the market, with banks and insurers making up the rest." "Companies are issuing more commercial paper to finance expenses such as growing payrolls, capital spending and mergers and acquisitions," John Lonski of Moody's tells the Journal. "Companies are more optimistic, more confident," he says. "There is a correlation between what happens with private-sector payrolls and commercial paper." The article continues, "This year alone, the amount of commercial paper outstanding issued by nonfinancial companies has jumped $82.5 billion to $278.6 billion, according to Fed data, before adjustment for seasonal factors." It continues, "Fed Chairwoman Janet Yellen has been publicly frank that the central bank will keep short-term interest rates low even as the economy recovers. That's persuaded short-term borrowers they can continue to roll over their debts." "That has encouraged a fair amount of issuance in the CP market. They feel that much more comfortable operating their programs at capacity," Barclays' Christopher Conetta tells the Journal. The piece adds, "Apple, for example, recently began issuing up to $10 billion in paper for the first time in 17 years. The tech giant has paid 0.05% for three-week paper and 0.15% for debt maturing in about six months, according to Peter Crane, president of Crane Data LLC, a money-fund research firm." It explains, "There's strong demand for debt from companies like Apple as yield-starved, short-term investors hunt for higher rates. Three-month commercial paper yields range from about 0.10% for the highest-ranked borrowers to a little over 0.25% for so-called Tier 2 companies, according to the Fed. By contrast, three-month bank certificates of deposit are returning an average 0.09%, according to Bankrate.com." The WSJ quotes Crane, "Demand is insatiable for nonfinancial, plain-vanilla blue chips."

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