NEW YORK--(BUSINESS WIRE)-- U.S. prime institutional money market funds (MMFs) remain focused on high quality assets and relatively short duration amid ongoing market uncertainties, according to Fitch Ratings.
Since May 2011, U.S. prime MMFs have been affected by cash outflows related to MMFs' exposure to eurozone financial institutions. Rated MMFs have been able to handle these outflows with available liquidity without reliance on secondary market liquidity. In addition, shadow net asset values (NAV) remain stable despite market uncertainties associated with the European sovereign debt crisis.
Fitch attributes this stability to conservative portfolio management practices exhibited by Fitch-rated prime MMFs, which are managed with substantial liquidity cushions relative to Fitch rating criteria and regulatory requirements. For example, as of July 2012, MMFs invested conservatively in daily and weekly liquid assets at the levels of 20% and 46% of their assets, respectively. On average, MMFs' weighted average maturity and weighted average life equaled 44 and 67 days, respectively.
The eurozone crisis, negative credit migration among global financial institutions, and longer term U.S. fiscal trends will further challenge MMFs. Fitch believes MMFs will need to continue to focus on conservative liquidity, interest rate and spread-risk management to position their funds as investors react to market events.
The full report 'MMFs Demonstrate Ample Liquidity' is available at 'www.fitchratings.com.'
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: MMFs Demonstrate Ample Liquidity (Daily and Weekly Liquidity Supports Stable NAV)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=687154
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
Fitch Ratings
Gwen Fink-Stone, J.D., +1 212-908-9128
Associate Director
Fitch, Inc.
One State Street Plaza
NY, NY 10001
or
Viktoria Baklanova, PhD, CFA, +1 212-908-9162
Senior Director
or
Media Relations:
Brian Bertsch, +1 212-908-0549
Email: brian.bertsch@fitchratings.com
Source: Fitch Ratings
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Copyright Business Wire 2012 |
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