News Column

Fitch: Changes to Bank Support Pose New Challenge for MMFs

May 6, 2014



NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: U.S. Money Market Funds Quarterly 1Q14

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748107

Potential changes to certain banks' ratings due to declining sovereign support could further constrain the universe of investable assets for MMFs, according to Fitch Ratings' 1Q14 U.S. money market funds quarterly report.

Sovereign support has historically been correlated to both bank and financial institution default risk, so changes in sovereign support could potentially have a meaningful impact on the ratings of certain banks, notably in the U.S., EU and Switzerland. Fitch's financial institutions group outlined three paths that bank ratings could take based on countries' resolution frameworks, which ranged from no change in sovereign support to material weakening of sovereign support. This could impact money funds, as their exposures as of March to the U.S. and EU were 25% and 30%, respectively.

Separately, as managers have gained more comfort with the Treasury FRN program, MMFs have been increasing allocations, to 38% of the total offered in March.

The full report, 'U.S. Money Market Funds Quarterly 1Q14', is available at 'www.fitchratings.com'.

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, +1 212-908-9151

Director

Fitch Ratings, Inc.

One State Street Plaza

New York, NY 10004

or

Media Relations:

Brian Bertsch, +1 212-908-0549

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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