Reuters, JPM on Brexit, MMF Holdings
Reuters writes, "U.S. money funds pare UK exposure before Brexit vote - J.P. Morgan." It says, "U.S. money market mutual funds have reduced their exposure to short-term British bank debt ahead of the June 23 referendum on whether Britain would stay in the European Union, J.P. Morgan Securities said on Monday. At the end of May, the prime money funds, which J.P. Morgan tracks, cut their holdings of commercial paper, certificates of deposits and other short-dated securities issued by British banks by $4 billion from April to $41 billion. Year-to-date, however, the funds' holdings of British bank debt was up $6 billion from the end of 2015, J.P. Morgan data showed. "Brexit risks appear to have had a modest effect on holdings of British banks to date," J.P. Morgan analysts Alex Roever, Teresa Ho and John Iborg wrote in a research note. "With the Brexit referendum vote just two weeks away, we expect volumes in short-term British bank debt to be low for the time being," they said.... Rating agencies might downgrade their credit ratings on Britain if Brexit were to happen, J.P. Morgan analysts said. Standard & Poor's has kept UK with its top AAA-rating since 1978, while Moody's and Fitch assigned their second-highest credit ratings to Britain. Credit downgrade might affect the ratings of British banks, according to the J.P. Morgan analysts. "However, all things considered it is important to note that British banks do not rely heavily on the U.S. money markets," they said. Prime money funds had $924 billion in assets at the end of May, down $35 billion from April." In other news, a press release entitled, "Moody's assigns Aaa-mf rating to two BlackRock Money Market Funds," says, "Moody's Investors Service has assigned Aaa-mf ratings to BlackRock Money Market Portfolio and BlackRock Liquidity Funds TempCash. The Aaa-mf ratings reflect Moody's view that the funds will be able to meet their dual objectives of providing liquidity and preserving capital.... The Aaa-mf rating assignments also consider the quality of the fund sponsor. BlackRock is a leader in managing cash portfolios with US$292 billion in global liquidity assets across multiple currencies." Also, another release titled, "Fitch Assigns New Ratings to Eight Western Asset Money Market Funds," reads, "Fitch Ratings has assigned 'AAAmmf' ratings to the following eight money market funds sub-advised by Western Asset Management Company (Western Asset) as follows: Western Asset U.S. Treasury Reserves; Western Asset Premium U.S. Treasury Reserves; Western Asset Institutional U.S. Treasury Reserves; Western Asset U.S. Treasury Reserves, Ltd.; Western Asset Government Reserves; Western Asset Institutional Government Reserves; Western Asset Government Money Market Fund, Ltd.; Western Asset U.S. Dollar Liquidity Fund.... The 'AAAmmf' ratings reflect: The funds' overall credit quality and diversification; Low exposure to interest rate and spread risk; Holdings of daily and weekly liquid assets consistent with shareholder profiles and concentrations; Maturity profiles consistent with Fitch's 'AAAmmf' rating criteria; The capabilities and resources of LMPFA and Western Asset."
