1 min readDecember’s arrival brings with it tidings of uncertainty for Treasury professionals. The looming fiscal cliff and the December 31st expiration of the Transaction Account Guarantee (TAG) program bracket a variety of outcomes for tax policy, spending and deposit regulations that could have wide-ranging repercussions for businesses. One challenge we explored last month was the expiration…
2 min readAbstract The expiration of transaction account guarantees requires actions from treasury cash managers. While essentially all of the $2.0 trillion growth in domestic deposits since 2007 went to the 20 largest banks, the banks’ deposit credit strength declined by almost three ratings notches over the same period. Although 13 of the 20 had Aaa deposit…
1 min readSince 2008, the cash markets have been positively impacted by a massive regulatory overhaul and supported through a multitude of government programs that led to credit generation and stability in the markets. Investors reacted positively to these programs, sifting through a variety of new choices that now offered government guarantees of principal and interest on…
2 min readThe much-anticipated vote on proposed changes to money market fund regulations was called off by SEC Chairwoman Mary Schapiro just days ago after she apparently failed to persuade the “swing vote,” Commissioner Luis Aguilar, to support her proposal. Ms. Schapiro’s reforms specifically targeted the issue of shareholder risk and they included the implementation of a…
2 min readAbstract Recent negative bank ratings actions foretell a secular trend that capital markets-oriented banks are slipping toward the lower tier of investment-grade categories. We believe these ratings downgrades are more than a temporary phenomenon that is easily reversible. While the near-term effect on corporate treasury portfolios will likely be manageable, long-term ramifications require more investor…
2 min readFebruary ushered in a sea of potential changes for corporate cash managers. Early in the month, The Wall Street Journal reported on a pending proposal by the SEC to stabilize money market funds through additional regulations. Later in the month, Moody’s Investors Service announced a total of 120 banking credits were being placed on negative…
1 min readBest practices for corporate cash risk management have evolved rapidly over the years. The pace of this evolution accelerated significantly since the credit crisis, where both investment and counterparty risk management took center stage. Treasurers wanted to know specifically what their exposures were. They sought detailed credit assessments of the exposures and looked to understand…
2 min readGreek debt crisis…Spanish banks…U.S. debt ceiling impasses…July certainly had its share of rollercoaster news for the markets to digest. As an investment manager of corporate cash, we focus on how our buy list of securities should be adjusted given the backdrop of these types of developments. While much of this news has been developing for…
3 min readAbstract The U.S. debt ceiling situation remains fluid, but we believe that a U.S. default is an extremely remote possibility. A ratings downgrade from AAA may be more likely due to the diminished prospect of a credible deficit reduction path. Market implications of such a downgrade may be greater than merely higher borrowing costs for…
2 min readAbstract Our recent participation at the Securities and Exchange Commission (“SEC”) roundtable discussion on money market funds and systemic risk gave us the impression that the government is moving closer to a policy draft on money market fund reform. Despite overwhelming complaints, the floating net asset value (“NAV”) approach remains a top choice for the…