IGTA Journal - Summer 2020

France, Article: The Happy Days of Commercial Paper In Europe By Arnaud Brunet, Editor in Chief, La Lettre du trésorier, from La Lettre du trésorier, No. 379, June – July – August 2020, magazine of AFTE, the French IGTA Member Association The financing of companies through the issue of securities with a maturity of less than one year has been steadily increasing since the 1980s. In France, the NEU CP market, Negotiable European Commercial Paper, created in 2016, is a good alternative to bank credit. Platforms are being set up to improve the liquidity of these over-the counter markets, which seize up or close down when an economic or financial crisis occurs. As far as the financial markets are concerned, the United States have often been a pioneer. In 1869, Marcus Goldman, born in Bavaria in 1821 and based on Pine Street in lower Manhattan, launched what was to become Goldman Sachs with the trading of promissory notes, instruments similar to the commercial paper in circulation today. Twelve years later, the founder of the famous Wall Street bank was trading the equivalent of $700 million worth of these securities today. Before him, as early as the 18th century, this market had developed in New York due to the lack of bank credit. It took a century to the market for debt securities with a maturity of less than one year to move into another dimension. On the other side of the Atlantic, in the 1980s, the annual growth rate of the market had risen to 20%. In France, a law of December 1985 aims to regulate the negotiable debt securities market. The financing of companies by the markets took a new turn with the installation in 2014, by Michel Sapin, Minister of Finance and Public Accounts, of the " Place de Paris 2020 " committee, and in 2015, with the publication of the "Report on the financing of corporate investment" by François Villeroy de Galhau, the Governor of Banque de France . These discussions will lead to the 2016 reform creating the Negotiable European Commercial Paper or NEU CP, which will replace the French Billets de trésorerie and Certificats de dépôt . Financing the WCR...and more The sale of commercial paper to investors (mainly money market funds but also companies looking for investments, banks looking for liquid securities, central banks, etc.) is an additional way for companies to finance all or part of their working capital requirements, as well as a pear for the thirst in the event of a cash shortfall, without having to seek bank credit and in a relatively simple way. This also makes possible, but more rarely, to refinance bank loans that are costly in fees, which the French SEB Group did in 2016 after the €1.6 billion acquisition of the German company WMF. The €1.7 billion bridge loan had been repaid in six months thanks, in particular, to issues of NEU CP at negative rates (after raising the programme from €600 million to €1 billion, rated A2), IGTA eJournal | Summer 2020 | 11