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Fitch: Constrained Market Supply at Year-End Pushes Funds to Alternatives

February 4, 2014

NEW YORK --(BUSINESS WIRE)-- Link to Fitch Ratings' Report: U.S. Money Market Funds Dashboard 4Q13 http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=734755 A significantly reduced supply of traditional money market fund (MMF)-eligible securities at year-end has pushed funds to allocate cash to alternative sources, according to Fitch Ratings' 4Q13 U.S. money market funds dashboard report. In response to low year-end supply, some MMFs chose to leave portions of their assets un-invested with their custodian banks. The limited investment options have also led to surging usage of the Federal Reserve's (Fed) reverse repo program (RRP). According to data from Crane Data , MMFs accounted for approximately 70%, or $139.2 billion of the total $197.8 billion lent to the Fed at year-end 2013. This amount represented 7.1% of government MMF assets, 6.8% of Treasury funds, and 4.7% of prime funds. The large scale of participation presents a stark contrast to the low average daily usage of the facility in November and October, of $4.6 billion and $6.0 billion , respectively. Separately, in recent months MMF sponsors have launched new cash management and liquidity products to prepare for possible market changes after proposed reforms are finalized later this year. Anticipating that investors' needs may change, a number of asset managers have recently launched 'enhanced cash' and other short-term bond funds. The full report, 'U.S. Money Market Funds Dashboard 4Q13', is available at ' www.fitchratings.com '. Fitch's 'Dashboard' series provide a one-page snapshot of key credit, regulatory and other issues of interest to investors for a particular industry. Opt-in to receive Fitch's forthcoming research on money market funds: http://pages.fitchemail.fitchratings.com/FAMMMFBlankOptin/ Additional information is available at ' www.fitchratings.com' . 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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Ratings Greg Fayvilevich Director +1-212-908-9151 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 or Media Relations: Brian Bertsch , +1-212-908-0549 ( New York ) brian.bertsch@fitchratings.com Source: Fitch Ratings


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