Asset Backed Commercial Paper Transaction

a single transaction in which an ABCP sponsor enters into a contract with a company (the seller, also known as the originator) under which the company sells receivables to an ABCP conduit. The ABCP conduit issues asset backed commercial paper (ABCP) to investors to pay the purchase price of the receivables. Because ABCP has such short maturities, almost all ABCP transactions are replenishing, in that – as receivables mature – the cash generated by those receivables is used by the ABCP conduit to purchase more receivables of the same kind from the seller. Some ABCP transactions will go on for many years, sometimes decades.

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