As an increasing number of companies look to structured products for funding, and short-term rates continue inching higher, ABCP issuance continues growing. As of the second quarter, U.S. ABCP outstandings reached $630.7 billion, a 5.1% increase from the first quarter and a 6.5% spike from the second quarter of 2004. And, use of extendible-note programs has increased to $99.9 billion outstanding as of June, up from $75.2 billion one year previous. That represents a jump to 15.8% of all ABCP issuance outstanding from 12.7% a year earlier.
For companies not yet prepared to hit the term securitization market or whose asset types may not work well within its framework, ABCP is considered a viable option. Particularly now as the cost of funding heads north, borrowing through secured avenues is beginning to look more attractive versus the rising interest rates on unsecured lines of credit.