WASHINGTON (MarketWatch) -- The outstanding level of asset-backed commercial paper fell for the 12th straight week, the Federal Reserve reported Thursday.
Asset-backed paper dropped by $9 billion, or 1%, to $875 billion in the week ending Wednesday.
Asset-backed paper, the short-term IOUs backed by assets such as mortgages, credit cards or other receivables, has plunged by $308 billion, or 26%, since the crisis of confidence in credit began in early August.
The collapse of the market has prompted mortgage companies and others who relied on the commercial paper market to seek alterntiave sources of funding, mainly by tapping existing credit lines at large banks. The banks, in turn, have sought alternative funding for their special investment vehicles.
Citigroup's shares were lower on Thursday on reports it needed to raise $30 billion in capital, perhaps by cutting the dividend. Meanwhile, the larger market for commercial paper continued to recover, rising $9.9 billion, or 0.5%, to $1.88 trillion.
Paper issued by financial firms surged by $28.6 billion, or 3.6%, to $824 billion. Paper issued by nonfinancial companies, on the other hand, dropped by $11.7 billion, or 5.2%, to $236 billion
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