(Adds Greece deal details in second paragraph.)
Feb. 9 (Bloomberg) -- The market for corporate borrowing via commercial paper rose for the fifth straight week, led by investor demand for short-term IOUs issued by foreign financial companies.
The euro and commodities rose today after European Central Bank President Mario Draghi said Greek party leaders reached a deal on austerity measures needed to qualify for international rescue funds, boosting confidence that Europe’s sovereign-debt crisis can be contained.
Demand for short-term bank IOUs “is another sign of just how effective the Draghi ECB has been in adopting the American strategy of short-term expedience,” Howard Simons, strategist at Bianco Research LLC in Chicago, wrote in an e-mail. “The market is pricing out a disaster scenario,” Simons said.
The seasonally adjusted amount of U.S. commercial paper rose by $700 million to $972.9 billion outstanding in the week ended yesterday, the Federal Reserve said on its website. That’s the highest level since Dec. 21, according to Fed data compiled by Bloomberg. Foreign financial firms’ issuance rose $8.4 billion to $167.6 billion outstanding, the fifth weekly rise and the largest gain since May, the data show.
Companies issue commercial paper to fund everyday payments such as rent and salaries. The amount issued by U.S.-based financial companies dropped by $4.1 billion to $287.8 billion outstanding, according to the Fed.
--Editors: John Parry, Dennis Fitzgerald
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