ABCP Market Swells $100 Billion as Banks Fund Leveraged Equity Trades Off Balance Sheet
Updated
Updated · Financial Times · Aug 21
ABCP Market Swells $100 Billion as Banks Fund Leveraged Equity Trades Off Balance Sheet
1 articles · Updated · Financial Times · Aug 21
Summary
$100 billion of ABCP market growth this year, including nearly $60 billion in the past two months, has been driven largely by non-bank alternative conduits, JPMorgan said.
That surge coincided with higher equity financing costs, suggesting banks and dealers are issuing more paper to fund stock-backed loans and repo activity for hedge funds and other leveraged investors.
Alternative ABCP programs package short-term secured loans—often routed through conduits and sold to money-market funds—letting prime brokers finance client positions without tying up regulated balance-sheet capacity.
The shift marks a move away from traditional receivables-backed ABCP toward securities-backed structures shaped by post-crisis Basel rules, linking cash parked in money funds more directly to leveraged stock-market activity.