Commercial paper has lost its buzz. Dozens of top-notch companies, including Coca Cola and PepsiCo, which has long relied on the market for fundraising, is repaying tens of billions of dollars in loans for new, longer-term facilities.

The withdrawal from the market of $ 1.1 billion commercial paper, typically used by companies to fund payroll, inventory and other short-term obligations, came quickly after fears about coronavirus took hold.

Alongside the two beverage giants, the pharmaceutical group Pfizer, operator of the theme park Walt disney and cigarette manufacturer Philip Morris International issued longer-term debt securities to repay their commercial paper (PC) borrowings.

In total, more than 40 companies have raised combined debt of $ 97 billion this year, in part to refinance CP, according to data provider Refinitiv. This marks a record and is close to surpassing the $ 105 billion borrowed in 2008 and 2009 during the previous financial crisis.

In turn, the CP issued by companies outside the financial sector fell to its lowest level since 2016, figures from the US Federal Reserve showed last week.

The decision of corporate treasurers to seek other sources of funding was prompted by turmoil in the CP market in March, when some investors refused to lend for maturities greater than five days. Firms first used lines of credit with banks to bolster their liquidity reserves, then began issuing longer-term bonds after a series of Fed interventions helped stabilize markets in the United States. credit.

The Fed’s safety nets included the CP market, where it launched a facility for lend to companies short term. But Wall Street advisers have warned that another market downturn could cause funding to dry up again.

“We don’t have the ‘everything is clear’ signal yet, so the practical way is to go out and get [long-term financing]”said Kevin Foley, global head of debt capital markets at JPMorgan Chase.

“[CP] was the first market affected and companies won’t seem prudent to return to it, if you have these other options.

Disney, which raised $ 11 billion in bond markets in May and had $ 8.5 billion in CP outstanding at the end of March, said it had deemed “appropriate to repay some of the debt given the level attractive rates and uncertainty in financial markets given Covid19. ”

The sharp drop in US Treasury yields has also encouraged companies to move from CP, which has maturities of up to 270 days, to longer-term debt. Meghan Graper, head of the U.S. Investment Grade syndicate at Barclays, noted that several companies that refinanced CP have achieved record borrowing costs in the bond market.

The new from Pfizer $ 750 million over five years bonds carried, for example, an annual coupon of only 0.8 percent. The drugmaker had more than $ 14 billion in CP outstanding as of May 1, with an average annual interest rate of 1.43%.

Other highly rated corporate borrowers in the CP market have secured 90-day funds at annualized interest rates between 0.15% and 0.48% in the past fortnight.

“Overall, it’s more efficient to fund over two to five years than to fund in the commercial paper market,” said Guy LeBas, strategist at Janney Montgomery Scott. “With the yield curve so low in absolute terms, from a treasurer’s perspective, it’s much safer to get financing. [elsewhere]. “