Principal investors in the commercial paper market

The most investors in the commercial paper market include non-financial corporations, money market funds, bank trust departments, smaller commercial banks, pension funds, and insurance companies. In effect, this is a market where corporations borrow from other corporations. These investor groups regard commercial paper as low-risk outlet for their surplus funds.
A recent innovation in the direct paper market is the master note, most frequently issued to bank trust department and other "permanent" money market investors. Under a master note agreement, the investing company notifies the issuing company how much paper it will purchase each day up to an agreed-upon maximum amount. Interest owed is figured on the average daily volume of paper taken on by the investor during the current month. The prevailing interest rate on six-month commercial paper generally is used to determine the appropriate rate of return.