At $660 billion, asset-backed commercial paper now accounts for approximately 44% of the entire CP market, up 4% this year, according to data from the Federal Reserve.

In fact, total CP has dropped approximately $100 billion this year, while ABCP outstandings have grown $26 billion.

However, ABCP growth appears to have slowed from previous years. On an absolute basis, outstandings in the ABCP market have increased $108 billion since last May, compared with $150 billion of growth last year at this time.

Still, on the overall corporate and unsecured CP front, top-tier issuers have increased approximately 2% May-to-May, and second tier issuers, or A2/P2/F2 issuers, are down 29%. ABCP, on the other hand, has had a strong 20% growth May-to-May.

"That is great for the asset-backed sector," said Janice Murray, a principal in the ABCP group at Morgan Stanley Dean Witter. "That really bodes well for our market. But what is going to be interesting is the changing demand dynamic."

According to a recent study by Douglas Rivkin, of the managed funds group at Moody's Investors Service, prime institutional money market funds are increasing their positions in ABCP. In fact, average holdings of ABCP are at 24%, up from 22% around this time last year.

Sam Pilcer, of Moody's ABCP group, pointed out that with the decline in CP as a whole, and the increase in ABCP, it's only natural that the money market managers would be increasing their allocations of ABCP.

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