WASHINGTON (Thomson Financial) - The Federal Reserve reported today that it has extended financing for the purchase of commercial paper in an amount equal to about 10% of the entire commercial paper market.

The Fed said the New York Federal Reserve Bank has loaned $144.8 bln toward the purchase of commercial paper as of Wednesday. A new Commercial Paper Funding Facility LLC is the entity that buys commercial paper through the Fed's extension of credit.

The Fed announced the new program earlier this month as a way of ensuring liquidity in the commercial paper market. At the time, Fed officials said it would extend credit to back a "significant" level of purchases, but did not offer any further definition.

The total amount of outstanding commercial paper is valued at about $1.3 trillion, meaning the purchases it has financed so far exceed 10% of the market.

The Fed also said that discount window borrowing continued to rise in the latest week. $110.7 bln was outstanding as of Wednesday, compared with $107.5 bln a week earlier.

Outstanding credit to primary dealers under the Primary Dealer Credit Facility fell to $79.5 bln from $102.4 bln the week before.

A separate line of credit made available to insurance giant AIG fell to $83.5 bln outstanding, from $90.3 bln. Treasury and the Fed in September agreed to open an $85 bln line of credit to help keep AIG afloat, then added another $37.8 bln in September.

Credit made available to eligible banks for the purchase of asset-backed commercial paper from money market mutual funds fell to $96.0 bln outstanding from $107.9 bln the prior week.

pete.kasperowicz@thomsonreuters.com pik/wash

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