wikiHow to Buy Commercial Notes

Commercial notes (also referred to as commercial paper) are a form of short-term debt issued by corporations to raise money to meet immediate needs. This type of debt can have a maturity of as little as 1 day and no more than 270 days. Commercial paper is a type of unsecured debt, meaning the lender (the investor) has no guaranteed claim on any asset of the issuing company in case of default. As a result, the best commercial paper is issued from corporations with outstanding credit ratings. Learning how to buy commercial notes will help you increase the breadth of your investment strategy.


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    Open an account with a brokerage firm. Commercial paper is rarely issued directly to individual investors, so you will need to do business with a broker in order to make a purchase. You can choose from a full-service brokerage firm or a no-frills online broker; both will allow you access to commercial notes.
    • If you don't already have an account with a stockbroker, consider avoiding commercial notes for a while. This type of debt is unsecured, and thus shouldn't be used as the foundation of an investment portfolio. Before investing in commercial paper, build a strong portfolio with lower-risk investments like government bonds.
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    Compare the credit ratings of companies that issue commercial paper. Because commercial notes are unsecured, it is important that the issuing company has excellent credit. These companies will present a lower risk of default. The 2 main companies that issue credit ratings for corporations are Moody's and Standard and Poor's. Look up the ratings for several large companies; anything less than an "AAA" rating should be passed over when purchasing commercial notes.
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    Compare the interest rates offered by several large companies. Once you have decided on several companies that have attractive credit ratings, determine the interest rates they are offering on their commercial notes. This information is available online or through your brokerage service. Remember, longer maturities tie your money up longer, and therefore need to offer a higher interest rate.
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    Issue a "buy" order to your broker. Once you have decided to buy a certain company's commercial paper, issue an order to your broker to buy the paper. Minimum investment amounts are often quite hefty for commercial paper - in U.S. dollars, commercial paper cannot usually be had for less than $1000, and often sells at a minimum of $100,000. Remember that this type of unsecured investment should not form the foundation of your investment portfolio.


  • Remember to monitor the financial statements of any company whose commercial paper you purchase. Commercial paper should be used to augment working capital, so make sure that the company is not issuing commercial notes to meet long-term obligations.

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