Failed Auctions Totalling $6 Billion Roil Auction-Rate Securities Market. This week's issue of Financial Week discusses failed auctions in the auction-rate securities market (ARS). Auction-rate securities, which money funds are not allowed to invest in because of the lack of a "hard" interest-rate reset, had been used by a number of corporate investors as higher-yielding "liquid" investments until a 2006 accounting firm ruling that ARS were not "cash equivalents" under FAS-95 (Financial Accounting Standards). Peter Crane tells FW, "At least 60 auctions have failed in recent weeks, which could represent as much as $6 billion" of the estimated $300 billion market. The article adds, "But the inherent risks that have abruptly come to light are scaring some corporate cash managers away."

Email This Article

Use a comma or a semicolon to separate

captcha image