The sluggish flow of commercial paper. (slow market for Canadian commercial paper)

While newer short-term paper markets around the world are flowing freely, the Canadian commercial paper market is silting up. Of 175 formal commercial paper programmes, only 105 are still active. In midyear, according to McLeod Young Weir, the Toronto brokers, domestic corporate issuers had 17.1% less commercial paper outstanding than the year before.

Yet this is one of Canada’s most protected markets. Pension fund managers are prevented by law from buying foreign commercial paper, and Canadian corporations are dissuaded from issuing commercial paper internationally by the government’s withholding tax – which can reach 15 % on international borrowings of less than five years.