NEW YORK (Reuters) – Rates on short-term U.S. business loans fell on Friday, suggesting that investors had started to respond to Federal Reserve interventions to return liquidity to the market, according to data released Monday by the central bank .

On Friday, the rate at which non-financial corporations could borrow substandard commercial paper – as short-term loans are known – fell with each maturity. For higher quality papers, rates fell at all maturities except 30 days.

Friday’s data represents the most consistent drop in those rates across the entire quality spectrum since March 4, according to data from the Fed.

This suggests that there has finally been a return of some liquidity to the market since the Fed announced on March 17 that it would reinstate the Commercial Paper Funding Facility (CPFF), an operation used during the 2008 financial crisis, in which the central bank acts. as lender of last resort for businesses otherwise unable to borrow in the short-term market.

“It looks like rates are settling down … so that’s an improvement. The absolute amounts the Fed bought that we know of aren’t that big yet, but I think the fact that they’re going to stay in the market certainly alleviates a lot of concerns. It works, ”said Marvin Loh, senior global markets strategist at State Street Global Markets.

One of the reasons the Fed’s announcement may not have immediately lowered rates in the commercial paper market is that market intervention did not begin immediately.

“The (special purpose vehicle) that they put in place to actually be the backer of the (commercial paper) world continues to fall into place. Halfway through the week, they started buying more aggressively with the ease of money market liquidity, which certainly helped, ”Loh said.

The overnight borrowing rate for substandard non-financial paper US1DCP22 = fell to 2.53%. For day-to-day premium non-financial paper US1DCP = it fell to 0.13%, which it had also reached on Thursday, the lowest since 2015.

The spread between the two rates, a measure of how risky investors think low-grade paper is better than its high-grade counterpart, was 240 basis points. It reached 264 basis points on March 20, its highest level since 2008.

As for the market on Monday, Loh said, “Things are stable. Much quieter than in the middle of last week, but not much better than Friday. Just stable from Friday levels.