March 17 (Reuters) - The spread between interest rates on lower and higher-rated overnight commercial paper increased on Monday to its widest level since 2008, signaling investors are demanding a hefty premium to hold riskier debt.
The rate for AA-rated paper was 0.76% versus 3.05% for lower-rated debt, according to data posted on the Federal Reserve’s website on Tuesday.
The Fed announced on Tuesday it was taking steps to provide a liquidity backstop for the market, which it said had been under “considerable strain” in recent days due to the coronavirus outbreak.
Investors have been calling on the Fed to increase liquidity into the commercial paper market - which companies tap for short-term loans. (Reporting By Kate Duguid and Karen Pierog Editing by Chizu Nomiyama)