Asset-Backed Commercial Paper - ABCP

AAA

DEFINITION of 'Asset-Backed Commercial Paper - ABCP'

A short-term investment vehicle with a maturity that is typically between 90 and 180 days. The security itself is typically issued by a bank or other financial institution. The notes are backed by physical assets such as trade receivables, and are generally used for short-term financing needs.

INVESTOPEDIA EXPLAINS 'Asset-Backed Commercial Paper - ABCP'

A company or group of companies looking to enhance liquidity may sell receivables to a bank or other conduit, which, in turn, will issue them to its investors as commercial paper. The commercial paper is backed by the expected cash inflows from the receivables. As the receivables are collected, the originators are expected to pass the funds to the bank or conduit, which then passes these funds on to the note holders.

RELATED TERMS
  1. Collateralized Mortgage Obligation ...

    A type of mortgage-backed security in which principal repayments ...
  2. Collateralized Debt Obligation ...

    An investment-grade security backed by a pool of bonds, loans ...
  3. Pass-Through Security

    A pool of fixed-income securities backed by a package of assets. ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, ...
  5. Fannie Mae - Federal National Mortgage ...

    A government-sponsored enterprise (GSE) that was created in 1938 ...
  6. Ginnie Mae - Government National ...

    A U.S. government corporation within the U.S. Department of Housing ...
Related Articles
  1. Profit From Mortgage Debt With MBS
    Bonds & Fixed Income

    Profit From Mortgage Debt With MBS

  2. Asset-Backed Commercial Paper Carries ...
    Mutual Funds & ETFs

    Asset-Backed Commercial Paper Carries ...

  3. Common Bond-Buying Mistakes
    Options & Futures

    Common Bond-Buying Mistakes

  4. Why do longer term CDs pay a higher ...
    Investing

    Why do longer term CDs pay a higher ...

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center