Greece, PR No Impact on MMFs
The WSJ's CFO Journal writes "Corporate Impact From Greece Looks Tame, So Far". It says, "Months of warnings about debt defaults in Greece and Puerto Rico have allowed the vehicles where corporate finance chiefs store their cash time to shelter themselves from the immediate impact of crises in those regions. For example, cash isn't flowing out of money-market funds, which hold billions of corporate cash, according to Peter Crane, president of Crane Data, which tracks the industry. "It's relatively calm," he said. He noted that assets in money funds rose $1.9 billion on Friday to $2.522 trillion, suggesting that few corporate treasurers were pulling money out in advance of this weekend's talks. There's very little reason for them to. Money funds don't invest in low rated debt such as Greek or Puerto Rican bonds, he said. As money flows into high-quality assets such as U.S. Treasurys, money funds invested in those securities could see more inflows. Anthony Carfang, a partner at Treasury Strategies Inc., said that new banking regulatory rules could aid the funds. He explained that international bank rules are forcing banks to hold more in U.S. Treasurys, which could reduce the number of the bonds in circulation, as more investors seek the bonds as safe havens. Money funds, which are large holders of U.S. government bonds could therefore find it lucrative to lend out their holdings of bonds for investors who need the securities for the short term."
