The Financial Times writes "US funds return to European bank paper". The article says, "US money market funds have begun moving back into European bank paper, a sign that central bank efforts to backstop key institutions are improving risk appetite. This past week, the funds were buyers in increased issuance of French and Spanish banks' commercial paper, according to bankers. Notes issued by US banks with foreign parents rose $6bn to $152bn and foreign domiciled bank notes outstanding rose nearly $3bn to $133bn, according to figures from the Federal Reserve. Last year, money market funds were sellers of many European banks' short-term commercial paper as worries grew about the repercussions of a possible European sovereign default." The FT quotes Chris Conetta, head of global commercial paper trading at Barclays Capital, "Money market funds in particular have shown an improved risk tolerance as we start the new year. We have seen a broadening of the foreign banks that they have been willing to buy."
