To ensure low-cost financing of its working capital, Bayer set up an ABS (asset-backed securities) program in June 2003. This program gives the company access to the very liquid and inexpensive A1+/P1 commercial paper market. For this purpose, receivables from European customers are revolvingly sold to a special purpose company, which refinances the purchases by issuing asset-backed commercial paper (ABCP). Due to the underlying security structure, these ABCP receive the best possible short-term rating. To enhance transparency, Bayer recognizes ABCP financing as a liability on its balance sheet.
