2 min readIn the run-up to the 2008 financial crisis, asset-backed commercial paper (ABCP) programs were among the many investments tainted by the subprime mortgage meltdown. The crash precipitated a steady outflow from a total of $1.2 trillion in ABCP investments at their peak in late 2007 to $238 billion in October 2017. But in recent years,…
3 min readAbstract Debt limit negotiations often go down to the wire, generating headline risk and investor uneasiness. The yield on T-bills maturing around default date may be substantially higher than those maturing in neighboring months. The exponential growth in government money market funds since the 2016 regulatory reform increases contagion risk should shareholders and portfolio managers…
1 min readWho would have ever thought the debt ceiling limit would become a dinner-table topic? In the past, Congress routinely voted to approve higher limits on debt covering the spending it had already authorized, and hardly anyone noticed. But in 2011, the debt-ceiling vote became a political football, with authorization tied to contentious debates about limits…
1 min readRising interest rates may offer new opportunities for higher yields, but they also present institutional cash investors with fresh challenges. Ultra-conservative investment strategies no longer meet expectations for higher returns, so managers know they may need to move beyond a safe mix of Treasuries and FDIC-insured cash accounts. In an earlier era, their job would…
2 min readAbstract The return of yield opportunities presents institutional cash investors with fresh challenges. Higher rates have driven up the cost of staying with ultra conservative instruments. Money market fund reforms have left corporate cash managers with few clear choices to add yield. And historically popular cash vehicles that have undergone significant changes demand a fresh…
8 min readAmongst the numerous debates happening up on Capitol Hill, one that’s slipped under the radar is related to financial regulatory reform. On June 8th, with the whole of the country’s attention fixated on former FBI Director James Comey, the House of Representative passed the Financial CHOICE Act along party lines. The bill aims to rollback…
1 min readWhen the Federal Reserve began amassing Treasuries and mortgage-backed securities to fight deflation in the wake of the 2008 financial crisis, no one knew for sure how much debt it would add to the nation’s balance sheet, or how long the unprecedented “quantitative easing” program would last. While the answers are still by no means…
4 min readAbstract Key takeaways: While details are lacking, one can generally expect balance sheet normalization to start at the end of 2017, with reinvestment gradually phased out over one year, taking 2.5 years to complete for a total reduction of $1.8 trillion in Treasury and MBS bonds. Impacts to Expect: Higher interest rates on Treasury securities…
1 min readThe rapidly changing global risk management landscape has created new challenges for corporate cash managers. Money market fund reforms, rising interest rates, regulatory uncertainty and geopolitical upheavals have elevated potential risks, inviting ever-closer board scrutiny of Treasury operations. Our white paper this month, Separately Managed Accounts in Counterparty Risk Management, explores the latest challenges in…
3 min readAbstract Counterparty risk management should have an integrated framework. While utilizing a separately managed account may help reduce a corporation’s concentration risk in a money market fund, it may also be an important tool to reduce enterprise level counterparty risk. A portfolio of securities not correlated with the firm’s largest credit exposures may help to…