Perhaps, the cyclical nature of these paper companies, and the fact that the last down cycle came almost a decade ago, have investors worried. Although maturities can go as long as days before coming under the purview of the SEC, maturities for commercial paper average about 30 days, rarely reaching that threshold.
The company operates out of Russia and has been helpful in securing Russian forest-lands for company use. As a result, only firms with high-quality debt ratings will easily find buyers without having to offer a substantial discount higher cost for the debt issue.
One way it has done this is by reducing its employee headcount by over 8, since However, pressure from increasing debts, expensive pension plans, and weakness in the containerboard segment along with various other factors may lead to an underwhelming Q2.
This innovative fiber is especially desirable for adult incontinence consumers who value discretion. The company consistently posts impressive cash flow figures and has stable revenues despite the continued acquisitions, divestitures and re-purposing of mills.
In the worse-case scenario of a market recession which causes cyclical names like IP to tank, these debts may become an issue though, and they surely add to the risk for investors. This interest rate can be adjusted for time, contingent on the number of days the commercial paper is outstanding.
International Paper is set to take advantage of these long-term growth trends over the coming years. However, of late the packaging industry has seen a revival in paper product use due to an emphasis on renewable, sustainable and most importantly biodegradable resources.
Overall it was a strong Q1 for International Paper, buoyed by tax reform, but hindered by increased costs and weather issues. Commercial Paper Funding Facility Another effect of the commercial paper market freezing was some money market funds, substantial investors in commercial paper, "breaking the buck.
Advantages of Commercial Paper A major benefit of commercial paper is that it does not need to be registered with the Securities and Exchange Commission SEC as long as it matures before nine months, or days, making it a very cost-effective means of financing.
This dedication has led it to a dominant position in the corrugated business, a status it would like to achieve in other segments as well. IP was established in through a merger of 20 paper mills in the northeastern United States. The company has strong fundamentals, an appealing valuation, and a solid dividend.
That, coupled with increasing costs and pressure on the containerboard sector, means weak valuations. Although I am sure many investors thought something similar back in before the recession in which IP was forced to cut its dividend and shares tanked.Overall, I believe International Paper has a compelling growth story, something a paper company hasn't had in some time.
The strong fundamentals and solid dividend along with Q1's return to revenue growth could mean IP is a solid long-term investment.
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Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable and inventories, and meeting short-term liabilities. Maturities on commercial paper rarely range longer than days.Download