LGIP Assets Lower in Q3 Says Fitch
Fitch Ratings published "Local Government Investment Pools: 3Q23," which tells us, "Fitch Ratings' two local government investment pool (LGIP) indices experienced an aggregate asset decrease in the third quarter of 2023 (3Q23). This is consistent with seasonal trends where LGIPs experience net outflows in 3Q. Combined assets for the Fitch Liquidity LGIP Index and the Fitch Short-Term LGIP Index were $563 billion at the end of 3Q23, representing a decrease of $14 billion qoq and an increase of $78 billion yoy. The Fitch Liquidity LGIP Index was down 2.2% qoq and the Fitch Short-Term LGIP Index was down 2.9% qoq, compared to average declines of 2.5% and 4.0%, respectively, in the third quarter over the past three years." It continues, "Weighted average maturities (WAMs) continued to rise in 3Q23 as the Fed has paused hiking rates. The WAM of the Fitch Liquidity LGIP Index increased to 37 days, still higher than prime '2a-7' money market funds at 28 days. The Fitch Short-Term LGIP Index ended the quarter with a duration of 1.12 years, down 6% since last quarter. Both Fitch indices ended 3Q23 with improved average yield profiles with average net yields of 5.35% for the Liquidity Index and 4.31% for the Short-Term Index, reflecting the 25bp rate hike in July." Fitch states, "The Fitch Liquidity LGIP Index increased exposure to Repurchase Agreements by 2.23% and decreased exposure to Commercial Paper by -5.38% qoq. Exposure to Government Agencies, Certificates of Deposit and ABS cumulatively increased by 2.05%. Additionally, the 'Other' category increased by 5.19% qoq, driven primarily by an increase in bank deposit exposure."
