ABCP = Asset-Backed Commercial Paper

An ABCP is a short-term investment vehicle with a maturity typically ranging from 90 to 270 days. It is collateralized by a pool of assets, such as trade receivables, loans, or credit card debt. The underlying assets generate the cash flow that is used to pay back the commercial paper upon maturity.

ABCP is often issued by SPV’s or conduits set up by financial institutions.

It is commonly used by companies as a cost-effective way to finance their operations or by financial institutions to manage liquidity.

Unlike traditional bonds, ABCP is a short-term financial instrument designed to provide working capital.