After all the market chatter and speculation on the surge in ABCP outstandings, it turns out the whole thing was, essentially, like everything else these days: an accounting error.

As ASR reported last week, the Federal Reserve Board numbers showed a significant increase in ABCP outstandings late in April - to the tune of $30 billion over one week - all of which puzzled market players who said they really hadn't witnessed this sort of increase in activity. Most attributed it to increased issuance by European conduits.

However, nearly the entire statistical increase was attributable to the addition of pre-existing programs to the source pool. On its outstandings page, the Fed notes that, "Asset-backed commercial paper outstanding level as of the week ending April 30, 2003 includes $28 billion of existing but previously unrecorded programs."

According to a source at the Board, it's likely that the historical figures will be revamped to accurately reflect volume had those programs been included all along. What's not clear to the market is how long these programs have existed. At this point, it's difficult to assign meaning to the surge in volume.

The Fed receives its CP data from the Depository Trust Company (DTC) under an agreement of program anonymity, which means that it's unlikely details on the added programs - such that they could be identified - will ever be released. However, there is a chance that the Fed will add an additional explanatory footnote on its outstandings page, regardless of whether the past data will be modified.

The Fed official made it clear that the added outstandings were not reclassified out of a different CP category, but were completely left out of the previous totals.

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