2 min read“Change is the law of life. And those who look only to the past or present are certain to miss the future.” — John F. Kennedy Abstract Collateralized commercial paper (CCP) made its debut last November to institutional cash investors. This new structure allows investors to purchase commercial paper from entities conducting term repos with…
3 min readAbstract Recent events related to government sponsored enterprise (GSE) reform have prompted short-duration investors to question the level and nature of government support for their debt issuance after December 31, 2012. The housing GSEs play a critical role in the U.S. mortgage market, representing 99% of all new mortgage-backed securities (MBS) issuance in recent years….
2 min readAbstract AAA-rated fixed rate credit card ABS may be viable investments for corporate treasurers. Transparent asset collateral, servicer quality, potential sponsor support, relatively short maturity schedule, and soft-bullet structure are some of the sector’s advantages over other forms of ABS. The credit card ABS sector stood the test of time without significant ratings implications during…
2 min readAbstract Credit risks in prime money market funds stem from investments in non-government securities. In reviewing credit concentrations in a group of AAA-rated prime funds representing 50% of industry prime fund assets, we found that fund managers improved credit and liquidity positions by boosting investments in U.S. Treasuries and repurchase agreements. As of December 31,…
3 min readMeet the New Year, same as the old – with a twist. In preparing our treasury investment strategy outlook for 2011, it seems there isn’t much we have not already seen or experienced in 2010 – an exceptionally low interest rate environment, the Eurozone sovereign debt crisis, and a wave of financial regulations. Indeed, we…
3 min readIntroduction As 2010 draws to a close, we cannot help but take note of the sea change in how corporate treasurers are managing their cash portfolios since the capitulation of the financial markets in September 2008. If we characterize 2008 as the year of “shellshock” and 2009 as one of “bunker mentality,” 2010 clearly is…
2 min readIntroduction With just two days remaining until the Federal Reserve Board’s key policy meeting, it is almost impossible to avoid the term “quantitative easing round two (QE2)” in the financial press. Ever since the keynote speech by Fed Chairman Ben Bernanke last August , rumors have been rampant that the Fed will implement a daring…
2 min readIntroduction As far as financial weather conditions go, the past few months represented very unusual patterns for financial regulators, who broke the usual summer doldrums with a number of regulatory gales. While the new regulations will likely have a profound and lasting impact on our financial lives, most of us are simply overwhelmed by the…
1 min readAbstract With the Fed on hold for an extended period, institutional cash investors need a new perspective on dealing with the prolonged low yield reality. Our four-step guide reminds investors to expect lower yields in the new environment, increase exposure only to securities supported by strong fundamentals, improve yield potential with moderate maturity extension, and…
2 min readAbstract This paper attempts to quantify the impact of a liquidity premium in money market funds by modeling three hypothetical portfolios of 29, 60, and 121-day weighted average maturities (WAM). Through our modeling process, we found the WAM extensions would have resulted in 0.11% and 0.31%, respectively, of additional annual yield potential over the 29-day…