Northern Trust Provides Capital Support Agreement to Money Funds. Northern Trust has entered into a "Capital Support Agreement" with several of its domestic and offshore money market funds, a short-term investment fund (STIF), and "other unregistered short-term investment pools" to provide capital to support fund NAVs due to investments in Whistlejacket Capital LLC and White Pine Finance LLC. The press release from Northern says, "Whistlejacket Capital LLC and White Pine Finance LLC have recently been downgraded by rating agencies. Although it was not obligated to do so, the Corporation entered into the Capital Support Agreements in order to provide stability to the Funds and investors in the Funds." Northern Trust will contribute the difference between the amortized cost value and the disposition or sale value of the securities, or an amount necessary to restore the funds' NAVs to either $0.995 or $0.9975. Northern becomes the 11th advisor to go public with support of its money market mutual funds. More support actions are likely to surface due to concerns over Standard Chartered's Whistlejacket SIV. Northern is the 16th largest manager of money funds, according to Crane Data, overseeing $57.3 billion, including the $14 billion Northern Institutional Diversified Assets (BDAXX) and the $12 billion Northern Trust Money Market Fund (NORXX). Northern's maximum capital contributions are capped at $229 million for the 4 domestic U.S. money funds, 2 offshore money funds, STIF and "Core Select Pool". "This is a liquidity issue.... When we look through this SIV, there is plenty of high-quality stuff that doesn't look problematic." said CFO Steven Fradkin on a conference call this afternoon. See other coverage: Bloomberg, Chicago Tribune, and MarketWatch.

Email This Article




Use a comma or a semicolon to separate

captcha image