Anyone here know Commercial Paper??

Question

Anyone here trade commercial paper?  I am familiar with residential of course but I don't know anything about commercial paper or how it differs from residential paper trading/investing.  I just want to know basics.  Where to source, what is the pricing like, etc.

Dion DePaoli · Answer

@Jim Hartmann thanks for the tag.  Haven't been to the boards in a good while.

@Terrence Evans commercial paper is different from residential as the property is different, some language in the documents is different and the treatment of business/company borrowers is a little different than residential consumers.Pricing is also different as most commercial loans are made with greater down payments and may involve personal guarantees or liens over business/personal property.  Bankruptcy can be a little tougher to deal with and the borrowers are often times more sophisticated and will defend themselves.  Sourcing can come from any place you might imagine including private sellers, banks, lenders and investment funds.

Jim Hartmann · Answer

Terrence,

Check with @Dion DePaoli or @Cason Cusack as they have a background in commercial note buying and other investments.

Overall the process is the same, but you will just need to do more due diligence on the local economy and how stable are those who are using the building - especially during the pandemic where businesses are not able to be open or are closing their doors for good.

Jim

Terrence Evans · Answer

@Dion DePaoli: Thanks. Are there any online resources or books I can look at to do some additional learning??  I am not trying to get into the space right now.. But at least if someone asks me about it since I already do notes, I want to be able to sound halfway intelligent.