Are commercial papers different from ETNs and Treasury Notes?
Hi @FoxMcCloud! Yes, commercial paper is a unique security, different from ETNs and Treasury notes. Commercial paper is short term, zero coupon corporate debt that matures in 270 days or less to avoid SEC registration. Treasury notes are intermediate term US government securities that pay interest semi-annually and mature in 2-10 years from issuance. Exchange traded notes are debt securities that pay an amount of interest linked to the returns of a specified index (e.g. S&P 500).
The one thing that ties them all together - they’re all debt securities. Beyond that, they’re fairly unique. Hope this helps!
so commercial papers are basically another word for Treasury Bills used interchangeably?
No - Commercial paper is just commercial paper. While a Treasury bill is similar, it’s definitely not the same thing. Here are the specifics:
- Short term, zero coupon corporate debt
- Issued with 270 days to maturity or less
- Short term, zero coupon US government debt
- Issued with 1 year or less to maturity
I oftentimes call commercial paper the “Treasury bill of the corporate world,” but they are two distinct and different products. The big difference - the issuer. Corporations issue commercial paper, while the US government issues Treasury bills.
Got it! Thanks, Brandon.