Commercial Paper

[kingofdice]

I keep hearing about Dominican Commerical Paper as an investment alternative to earning interest in pesos from a Dominican Bank. Can one of our bright board posters, explain exactly what is Dom. Commercial Paper and how one would go about investing in these instruments? Thanks for any replies.

[Escott]

Do a search in "business" and you will find a website. Hope you speak Spanish as that is the language you will see the sight in.

Email me if you want an email address of a finance house you can get 22 percent from in Peso and 14% in dollars

Regards

[sjh]

In simple terms you could call it a short term corporate bond.

[ricktoronto]

Originally posted by shadley000
In simple terms you could call it a short term corporate bond.

Bonds generally have security held in trust for the bond holders. A better term would be an IOU from a commercial firm that has sufficient credit that should permit them to borrwo in the public CP market more cheaply than from Banks.

Still it is an unsecured IOU for 30-60-90 days so you need to understand the creditworthiness and liquidity of the issuer very well. OTOH, Bankers Acceptances (if there are such things in DR) are CP issued by "company A" that are then guaranteed for full payment by a Bank. Thus if the issuer proves to be a deadbeat it is th eBank's problem, and not yours.

If the CP Issuer you are considering is not rated ( by Moody's or S&P etc.) then you had better have a damn good idea how solvent they are beofre investing. I would imagine a rated CP issuer in the DR is highly doubtful entity to find.

[Jim Hinsch]

I hear frequently about a place where one goes to invest in commercial paper in Santo Domingo.

I think I remember DR1 recommending a specific place also.

Is each investment independent from every other, and dependent solely on 1 company (not the company that sold you the paper), and therefore you can potentially lose the entire investment while the outfit where you bought it remains without any responsibility and in business as usual?

As in two people go there at the same time and want a 15% investment. They both go back next month and one of they guys collects and the other is told "Sorry"?

[Escott]

I don't remember that website but it is in the archives. It is in Spanish.

Jim these are the biggest companies in the DR that that have paper for Short term and in Sto. Do.. Companies like National Car Rental etc..

Not so that 2 people buy and 1 is screwed. Company has to go out of business for you not to get paid I believe.

[sjh]

well the company could default on its debt too... You would then have to spend a lot of time trying to get your money back. You need to read the terms and conditions pretty carefully...

[kingofdice]

Thank you all for your replies. It appears the nice return on commercial paper is in correlation to the risk. I'd like one clarification: The 30, 60, 90 day notes on commerical paper - are they paying a full 15% or more in interest for the term of the note? Doesn't sound as bad as taking a risk over a 6 months or a year, although the return might be higher for a longer note period.
I did buy several hundred shares of Tricom about 18 months ago, that has lost half it's value. As mentioned previously, it is the only DR company listed on the NYSE and is considered a well ran company, although it's debt level is half a billion.

[Escott]

King, all telecoms and especially the wireless have been flushed down the toilet. AT&T Wireless went public not that long ago at 29 a share is now under 10. Dobson communications went public at 22 and is now under 2 bux.

Don't feel like the Lone Ranger pal, anyone that has invested in the Stock Market anytime in the last few years is losing their shirts or they weren't in the market or trading in inside info.

For the last several years I have been buying the max allowable of Ibonds from the US government in both my name and my daughters name. I buy them on the internet with a credit card and even get Freq flyer miles on Delta or American Airlines. It will also pay my daughters college and be 100% tax deductable on the interest. My 6% return is looking mighty good these days

You can get upwards of 18 percent in peso CD's from the banks. Pretty safe if you like pesos.

Regards

18% in peso CD's??