Friday, October 26, 2012

Asset Backed Commercial Paper Market Size

Before 2008 Asset Backed Commercial Paper (ABCP) was central to the shadow banking system.  ABCP was issued by special purpose vehicles (SPV's), which held a pool of longer term asset backed loans.  After 2008, most of the SPV's that issued the ABCP went into run-off mode, hence the decline of the shadow banking system.  Today, that process is surprisingly almost complete for the ABCP market.  The amount of ABCP left outstanding has fallen by $1T since 2007, about $200B per year.  At that pace, there's about 1.5 year's worth of ABCP supply left.

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