Money market mutual funds are celebrating SIV-free status. Almost all of the major complexes have received, or are about to receive, their final structured investment vehicle payments. The threat of a Sigma Finance, the largest of the non-bank supported finance companies, default impacting money funds is now gone. The company paid off the final holdings of Federated and some others today, and Fidelity received its last Sigma payment earlier this month. We were unable to find any money funds with Sigma holdings maturing after next week.
The Subprime Liquidity Crisis, which began August 6, 2007, with the surprise extensions of EABCP issuers Ottimo, Broadhollow and Luminent Funding, recently passed the one-year mark. But it is thankfully coming to a close, at least for money market mutual funds, due to their 13-month maturity maximum. Funds are seeing the final vestiges of SIV MTNs (medium-term notes) mature. A year ago, almost half of all money funds held some SIV debt, but now a mere handful of funds own any.
Fidelity Investments, by far the largest money fund manager with over $410 billion (a 12.5% market share), became SIV-free on August 1, according to its most recent portfolio holdings. No. 2-ranked JPMorgan appears to be receiving its last Sigma payment today, along with final K2 and Links Finance payments, both bank-affiliated SIVs. JPM is also scheduled to see a final Five Finance payment next Wednesday.
Federated Investments disclosed on recent conference calls that its final two Sigma notes, of $250 million and $200 million, matured on Aug. 5 and Aug. 18. Federated President & CEO Chris Donahue says of their final SIV holdings, including Citi-backed Beta, Dresdner-backed K2, and HSBC-backed Asscher, "We remain comfortable [with these] ... and continue to see the winding down of the final notes maturing in August."
OppenheimerFunds Vice President of Cash Strategies Jesse Levitt says the company is celebrating 'SIV-free' status today, "Some portals and investors have been screening for SIV-free portfolios, so we're thrilled to now meet those requirements."
