Business Wire, July 26, 2010
NEW YORK — Fitch Ratings today published ‘U.S. Money Market Funds Quarterly:
Second-Quarter 2010,’ which discusses recent market developments and key
portfolio management trends for U.S. money market funds. Report
highlights include:
— A discussion of the gradually improving credit environment during the
second quarter of 2010, despite the sovereign risk concerns affecting
financial institutions domiciled in Southern European countries.
— MMFs reduced their weighted average maturities to reset dates due to
a combination of the eurozone credit turmoil and the new liquidity
requirements under updated Rule 2a-7.
— The average seven-day yield on individual prime institutional money
market funds was 0.09%, four basis points up from 0.05% at the end of
the first quarter.
— Average portfolio composition of prime institutional MMFs remained
relatively stable during the second quarter of 2010, although Fitch
would note moderate increased holdings of Treasury securities and
variable-rate demand notes issued by municipal entities.
— The contraction in ABCP issuance stabilized in the second quarter of
2010 at just under $400 billion.
— A new type of MMF-eligible putable securities with step-up coupons
was offered to U.S. MMFs by a number of foreign banks. The securities
are an attempt to bridge the funding gap incurred by MMFs’ demand for
short-dated assets and financial institutions’ needs for longer-term
financing.
— MMFs’ allocations to daily and weekly liquid securities were
consistent with baseline liquidity guidelines outlined in Fitch’s
updated global MMF rating criteria and the new updated Rule 2a-7.
The report is available on Fitch’s website at ‘www.fitchratings.com’.
Additional information is available at ‘www.fitchratings.com’.
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