Daily Links Archives: March, 2017

Citi Research published, "U.S. repatriation tax – myths and possibilities." Author Vikrma Rai writes, "Repatriation tax or taxing the U.S. multinational corporate earnings stranded offshore is a priority on the new administration's agenda whether to finance an ambitious domestic infrastructure program or to bring down the cost of tax reform. We discuss the myths and possibilities of a U.S. repatriation tax program.... It is widely estimated that U.S. MNCs have approximately $2.5 trillion in profits stashed abroad though we could analyze and account for less than $1.5 trillion." The piece tells us, "Repatriation of earnings is unlikely to affect yields through the avenue of fund flows. As discussed above, most of the US corporate earnings that are currently held outside US jurisdiction are already in USD-denominated assets. Therefore, contrary to popular belief, a repatriation program will not result in inflows into US based money funds or bond funds. The other potential mechanism by which repatriation could greatly affect yields is through liquidations of those USD-denominated assets. But our expectations for this too are that it is unlikely to occur in any significant magnitude.... In 2004, the dividends paid by foreign subsidiaries to US companies were taxed at just 5.25%. Although there were restrictions in place that said any money repatriated under the lower rate was to be used for "funding of worker hiring and training, infrastructure, research and development, capital investments, or the financial stabilization of the corporation for the purposes of job retention and creation," corporations back then found ways around this."

Bloomberg writes "Nordea 'Very Active' in U.S. Money Market as Reform Deters Banks." The article explains, "The biggest Nordic bank is among an elite group of issuers undeterred by the most dramatic reform to hit the U.S. money market in over three decades. While some European lenders have found it hard to access the dollar market since new regulations went into effect last year, Nordea Bank AB says it's offered almost $1 billion in certificates of deposit already this year, and is planning more offerings, also in commercial paper. 'We will keep the door open for further issuance,' Jaana Sulin, head of short-term funding at Nordea in Helsinki, said by phone. 'We are still very active both in CDs and CP out of the U.S. market.... When you look at the general market today, most European banks can't issue six and 12 months anymore because of this reform.'" Bloomberg explains, "But banks would rather issue longer-dated papers, Sulin said. Longer maturities mean more stable funding, which is a goal of bank regulators. Issuing longer maturities also makes it easier for banks to meet liquidity requirements. The clash in regulations has created a headache for issuers, Sulin said. Banks are 'required to issue longer short-dated paper to be more solid' while the investor gets 'pushed the other way around.'" They add, "But for Nordea, its ratings are helping. Funds are willing to buy its instruments at the longer end of the short-term horizon if the ratings are right -- and Nordea's are, Sulin said."

Stradley Ronon Stevens & Young, LLP Attorney Joan Ohlbaum Swirsky has published a new edition of her "Guide to Rule 2a-7, A Map Through the Maze for the Money Market Professional with Practical Applications." The 3rd Edition, "Newly Revised and Expanded to Reflect the Fundamental Reform of Rule 2a-7," explains, "Rule 2a-7 is a complex, often puzzling array of stringent requirements, further complicated by the 2014 reforms. This unique Guide will help you understand the impact of the reforms and help you achieve your goals relating to money market fund issues." The guide will help: "Optimize procedures for fees and gates, Address troubled securities in a money market portfolio, Review new and revised products being offered for investment by money market funds for compliance with Rule 2a-7, Respond to inquiries from the SEC staff relating to money market fund management, and Troubleshoot a money market fund's compliance system." The book will "address challenges under Rule 2a-7, including: Is your fund ready to comply with SEC guidance regarding fees and gates? Is your retail fund accurately categorizing shareholders as retail or institutional? Does your fund's compliance system incorporate the latest SEC commentary on stress testing? Does your fund's compliance system adequately reflect the elimination of references to ratings in Rule 2a-7?" The brochure adds, "We have prepared the Guide based on our extensive experience with money market funds - analyzing their investments, advising money market professionals, and shaping and interpreting new regulatory requirements. We are eager to share our knowledge with you through the Guide." The order form for a free copy of the Guide is here.

Citi's Steve Kang writes on "DTCC's new CCP repo service," in his latest "Short-End Notes," saying, "The Depository Trust and Clearing Corp (DTCC), an entity that has been centrally clearing interdealer repo transactions for GC collaterals, proposed Centrally Cleared Institutional Triparty (CCIT) – a new centrally cleared tri-party repo market for certain subsets of institutional cash lenders. This is currently under review by regulators and scheduled for implementation in Q2. Centralized repo clearing would lower B/S costs for dealers for netting benefits and lower risk weights on risk-weighted capital ratios. Therefore, depending on the scope of the change, it has potential to bring repo rates lower and swap spreads wider. At the current form, Registered Investment Companies (RICs, which includes 2a7 funds/hedge funds/REITs) are not eligible to participate in the program. Instead, non-RIC entities such as Separately Managed Accounts and corporate investors are likely to be the primary participants. Given that 2a7 funds – who provide around half of all Tri-party repo ex Fed/interdealer cash (roughly $1.5tn) – are not included, the impact seems limited for now. There certainly is potential for a wider eligibility at some point. We will be following up on this in our publications going forward."

The Financial Times writes, "Shadow bank crackdown prompts China cash crunch." Their article explains, "China's financial system suffered a cash crunch this week as new regulations designed to curb shadow banking caused big lenders to hoard funds, highlighting the danger of unintended consequences from official moves to lower their debt. Analysts have warned of rising risks from banks' increased reliance on volatile short-term funding rather than customer deposits to fund loans and other investments. If money market interest rates spike in times of stress, institutions can be forced to dump assets in order to meet payments due to creditors. Tightening liquidity prompted the seven-day bond repurchase rate to hit a three-year high of 9.5 per cent on Tuesday, versus an average of below 3 per cent since the beginning of 2014. Local media reported that several small rural lenders had defaulted on money market loans on Tuesday, prompting the central bank to offer them emergency funding. Central bank cash injections have since eased the problem, but the seven-day rate still hit 5.4 per cent on Thursday." The piece adds, "The latest liquidity squeeze is not as severe as the panic that swept money markets in June 2013, when a key short-term borrowing rate briefly hit 28 per cent. But the latest market shock is similar in that it is partly a result of intentional action by the central bank." No word yet of any impact on China's money fund industry, the world's second largest with approximately $664 billion.

The Investment Company Institute released its latest weekly "Money Market Mutual Fund Assets" report, which shows Prime assets decreasing for the second week in a row. It says, "Total money market fund assets decreased by $23.26 billion to $2.65 trillion for the week ended Wednesday, March 22, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $26.05 billion and prime funds increased by $3.12 billion. Tax-exempt money market funds decreased by $340 million." Total Government MMF assets, which include Treasury funds too stand at $2.125 trillion (80.1% of all money funds), while Total Prime MMFs stand at $398.0 billion (15.0%). Tax Exempt MMFs total $130.5 billion, or 4.9%. It explains, "Assets of retail money market funds increased by $820 million to $983.90 billion. Among retail funds, government money market fund assets decreased by $150 million to $603.24 billion, prime money market fund assets increased by $960 million to $254.79 billion, and tax-exempt fund assets increased by $20 million to $125.87 billion." Retail assets account for over a third of total assets, or 37.0%, and Government Retail assets make up 61.3% of all Retail MMFs. The release continues, "Assets of institutional money market funds decreased by $24.08 billion to $1.67 trillion. Among institutional funds, government money market fund assets decreased by $25.89 billion to $1.52 trillion, prime money market fund assets increased by $2.16 billion to $143.18 billion, and tax-exempt fund assets decreased by $350 million to $4.62 billion." Institutional assets account for 63.0% of all MMF assets, with Government Inst assets making up 91.1% of all Institutional MMFs.

The Wall Street Journal wrote, "Cost of Repo Safety Net Hits $74 Billion," which claimed, "The tab for backstopping a type of short-term lending on Wall Street known as repurchase agreements has risen to $73.84 billion, according to a filing this month by Depository Trust & Clearing Corp., which operates the clearinghouse that facilitates trading in that market. That compares with a $50 billion estimate circulated two years ago by people familiar with the DTCC, a firm owned by banks and trading firms that is a key cog of Wall Street's plumbing. The total reflects an amount DTCC will seek in commitments from member firms to cover the cost of a special credit facility. That facility can be invoked if a member defaults and the clearinghouse’s other resources become exhausted, forcing its Fixed Income Clearing Corp. subsidiary to step into the shoes of the defaulting firm and assume its financial obligations." In other news, Reuters writes, "U.S. Money Market Assets Fall After Fed Raises Rates." It tells us, "U.S. money market fund assets recorded their biggest weekly drop in two months following the Federal Reserve's widely expected interest rate by a quarter percentage point last week, the Money Fund Report said on Wednesday. Money fund assets declined by $25.76 billion to $2.626 trillion in the week ended March 21, marking its biggest decrease since $27.08 billion in the Jan. 17 week."

Following the Federal Reserve's interest rate increase last week, money market yields have risen by about 7 basis points. Yields should continue higher over the next month as funds digest the remainder of the Fed's 25 basis point move. As of yesterday, the first batch of the highest-yielding funds broke above 1.0% for the first time in almost 10 years. (See our Highest-Yielding Money Funds table above.) The top-yielding Prime Retail money funds, with data as of March 20, include: Fidelity Inv MM: MM Port Inst (FNSXX) at 1.02%, BlackRock Money Market Port Inst (PNIXX) at 0.96%, JPMorgan Liquid Assets Capit (CJLXX) at 0.96%, Federated Prime Cash Oblig WS (PCOXX) at 0.91%, and Vanguard Prime MMF Adm (VMRXX) at 0.86%. The highest-yielding Prime Institutional money funds include: Morgan Stanley Inst Liq MMP Inst (MPUXX) at 1.00%, JPMorgan Prime MM Capital (CJPXX) at 0.97%, UBS Select Prime Money Mkt Pref (SPPXX) at 0.97%, Fidelity Inv MM: Prime MMP Inst (FIPXX) at 0.96%, and BlackRock Lq TempFund In (TMPXX) at 0.95%. (Note that we've excluded repeating share classes and private or internal money funds from this ranking. See our latest Money Fund Intelligence Daily for the latest full rankings.) Our Crane 100 Money Fund Index, the average of the 100 largest taxable money funds, now stands at 0.57%, up 0.07% from a week ago, while our Crane Money Fund Average, which include all 663 taxable MMFs tracked by Crane Data, has risen from 0.31% to 0.37% in the 7 days through March 20. Watch for these both to continue higher over the coming weeks and to stabilize around 0.75% and 0.55%, respectively, once they've digested the entire Fed hike in a month or two.

Fitch Ratings launched a "New European Money Fund Reform Hotspot." They explain in a statement, "We are pleased to announce that Fitch Ratings has launched a new hotspot on European Money Market Fund Reform. The hotspot features Fitch's latest commentary and analysis on the European money fund reform process. We will provide insightful and relevant content to help you navigate the important changes that will be brought about by these reforms (likely to be effective in late 2018)." They add, "The most recent topic to feature on the hotspot is an analysis of liquidity levels in the portfolio of existing rated funds, calculated in accordance with the liquidity definitions in the proposed reforms. We find that liquidity levels are high, well above the levels at which fund boards must consider applying liquidity fees or redemption gates once the reforms are effective." The release, "Fitch: European Money Fund Regulatory Liquidity High," explains, "Fitch Ratings says that liquidity levels in rated European money funds are high, relative to regulatory thresholds that are expected to go into effect late 2018. Average weekly liquidity was 38% across the portfolio of Fitch-rated funds as of end-December 2016, well above the 10% threshold at which government-only constant net asset value (CNAV) and low volatility net asset value (LVNAV) funds would be forced to impose a liquidity fee or redemption gate once the reforms are in force (likely in late 2018)."

Kroll Bond Rating Agency issued AAAkf ratings to the Florida Education Investment Trust Fund FEITF Term Portfolio, the Michigan Liquid Asset Fund Plus Michigan Term Portfolio, the Missouri Securities Investment Program MOSIP Term Series, the TexasTERM Local Government Investment Pool TexasTERM Portfolio, and the Minnesota School District Liquid Asset Fund Plus MSDLAF+ Term Portfolio. The first release says, "Kroll Bond Rating Agency (KBRA) has assigned a Fund Rating of AAAkf to the Florida Education Investment Trust Fund FEITF Term Portfolio. The rating reflects the Portfolio's Primary Quantitative Rating (PQR) as measured by the KBRA Funds Credit Quality Rating Matrix, which is based on the credit quality of the underlying instruments that comprise the portfolio. Additionally, the fund rating is influenced by the results of the qualitative assessment of the investment advisor, PFM Asset Management LLC (PFMAM). The qualitative shadow rating (QSR) for the fund was found to be strong." Another release explains, "The Michigan Liquid Asset Fund Plus ("MILAF+" or "the Trust") was created in May 1987. MILAF+ is a trust organized under the laws of the State of Michigan. The original sponsor of the Trust is the Michigan Association of School Boards. The Trust is designed to be a comprehensive cash management program for Michigan public agencies to seek the highest possible yield while maintaining liquidity and preserving capital. MILAF+ is classified as a Local Government Investment Pool (LGIP)."

Yesterday's Wall Street Journal featured, "The Fed Raised Rates. Don't Expect the Same for Your Bank Deposits." It explained, "At some point, the Federal Reserve's rate increases will trickle down to savers, who have been getting next to nothing on their deposits for years. But it will continue to be a slow and uncertain process. When the Fed raises short-term interest rates, as it did Wednesday, that increase usually flows through right away to the rates banks charge on credit cards, home-equity lines of credit and some other types of loans. Deposits work differently. The rates that banks offer depositors on certificates of deposit, savings accounts and checking accounts are more a function of what the banks are willing to pay. So far, that isn't much. The Fed raised interest rates twice in the recent past, in December 2015 and December 2016 -- the only two increases in a decade of near-zero rates. That made little difference to deposit rates." The piece adds, "This time, the banks don't need to compete for deposits given how flush they are -- so much so that some banks are asking certain customers to take their deposits elsewhere. Money-market funds, which can compete with banks for customers' deposits, are less of a rival now too, said Steven Alexopoulos, an analyst at J.P. Morgan. Regulatory overhauls have made them a less-appealing option for investors shopping around for higher deposit rates."

RBC Global Asset Management posted a video entitled, "Liquidity Management – Outlook 2017." Director of Product Management Nick Walstrom comments, "As we enter 2017, short-term investors need to be aware of multiple risk factors, most of which, haven't been contended with in almost a decade. In our latest video, Brandon Swensen, Co-Head of US Fixed Income and John C. Donohue, Head of Liquidity Management discuss the issues facing investors and provide ways to mitigate the risks." In the video, Donohue tells us, "At RBC, we are focusing on what we believe are the three largest issues facing capital preservation investors. The first, an uncertain Federal Reserve. The second, a new political environment, and the third, credit fundamentals." Donohue adds, "Short-term investors have moved on from money market reform that clouded 2016, and are now laser-focused on how to maximize return, maintain the highest degree of liquidity in the market while preserving capital. We continue to see clients migrate to customized separate accounts with an increased usage of government money market funds." Swensen comments, "Credit fundamentals have been a bright spot in the market for several years now, and we expect that to continue in 2017.... Credit spreads, however, are a bit on the tight side.... But we are expecting credit to remain a reliable source of excess income ... for investors throughout the year."

Bloomberg writes "Rising European Bank Deposits Wind Up at ECB as Lending Sputters." The article tells us, "Banks in the euro zone, flush with new deposits, have turned few of them into loans to companies and consumers. Instead they've parked most of the money at the European Central Bank, where they're paying billions of euros for the privilege of keeping it there. Since June 2014, when the ECB cut rates below zero, deposits at euro-zone banks have jumped by 802 billion euros ($848 billion), according to central bank data through the end of January. Lending to nonfinancial companies and consumers in the currency area rose by 169 billion euros over the same period, while deposits at the ECB in excess of required reserves soared by 1.1 trillion euros." The piece adds, "Negative rates were supposed to bring down borrowing costs, thereby encouraging lending. But banks in some European countries have cut loans because they're struggling with piles of bad debt and weak capital levels. Where lenders are healthier, there's little demand for funds because of uncertainty about global trade and regional growth."

Tom Hunt, Director of Treasury Services at the Association for Financial Professionals blogged recently on "Deposit Ratings: Why Treasurers Need to Use Them." He writes, "Deposit ratings are the latest instrument in rating agencies' toolkit. They can be particularly useful for corporate treasurers, because they give you a better view of how vulnerable your bank deposits are. Moody's and Fitch have both launched their own versions of deposit ratings, and Standard & Poor's has one in the works. I spoke with Moody's recently about these new ratings, and they clarified that they're not actually credit ratings. Rather, it's a liquidity rating, which is a bit like a money market fund rating." Hunt explains, "These ratings can be very valuable for treasurers in terms of managing bank relationships, as it's essentially a new data point for determining counterparty risk as they assess their share of the wallet. So if one bank's rating a little bit lower than you thought, it might be worth paring back a little bit on your deposits or direct investments with that institution. Moody's and Fitch are doing these ratings in different regions, and it is important to understand the nuances that could impact the ratings themselves. Some ratings might be lower or higher in say, Asia-Pacific, than Europe or the United States.... Now, as Moody's explains in an upcoming AFP Exchange article, the prospect of banks defaulting on these obligations, such as covered bonds and derivatives, is likely lower than before the financial crisis, due to Dodd-Frank regulations. Of course, all of that is up in the air now, given that portions of Dodd-Frank are on the chopping block. Therefore, it is critical that corporate treasurers have an accurate reading of their banks' risk of default."

Compliance Reporter writes "SEC examiners eye money market follow up." It explains, "Securities and Exchange Commission examiners plan to check on the impact of recent money market fund reforms, now that the compliance deadline has passed ... according to `Sarah ten Siethoff ... at the recent SEC Speaks conference in Washington, D.C." She commented, "As we go forward, this is an area where we are moving into monitoring mode, just making sure as the industry transitions to this new equilibrium that everything continues to work smoothly.... From our perspective this showed the resiliency to the markets that can happen when you have a good, long period to plan for this. It was an orderly transition, there were no hiccups or disasters in the market despite moving an incredible amount of money over that period." The publication adds, "The Office of Compliance Inspections and Examinations specifically cited money market funds as a target for 2017 in laying out their exam priorities, writing that they "will examine money market funds for compliance with these rule amendments, which became effective in October 2016. Examinations will likely include assessments of the boards' oversight of the funds' compliance with these new amendments as well as review of compliance policies and procedures relating to stress testing and funds' periodic reporting of information to the Commission." According to the publication, ten Siethoff also said, "At the end of all this we do have a different looking money market fund industry with different requirements.... We have floating net asset, institutional prime money market funds, we have retail prime money market funds that are stable value and have the ability to use liquidity fees and redemption dates, and we have a much more sizable population of government money market funds."

ICI's latest weekly "Money Market Mutual Fund Assets" report shows Prime assets increasing for the fifth week in a row, and the 10th week out of the past 11. Prime MMFs have risen by $20.7 billion, or 5.7% since 12/21/16. The release says, "Total money market fund assets increased by $10.12 billion to $2.69 trillion for the week ended Wednesday, March 8, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $8.17 billion and prime funds increased by $1.46 billion. Tax-exempt money market funds increased by $490 million." Total Government MMF assets, which include Treasury funds too and which represent 80.4% of all money funds, stand at $2.162 trillion, while Total Prime MMFs, which account for 14.7% of all MMFs, stand at $395.6 billion. Tax Exempt MMFs total $130.8 billion, or 4.9%. It explains, "Assets of retail money market funds increased by $3.02 billion to $979.92 billion. Among retail funds, government money market fund assets increased by $1.84 billion to $601.27 billion, prime money market fund assets increased by $980 million to $252.80 billion, and tax-exempt fund assets increased by $200 million to $125.85 billion." Retail assets account for over a third of total assets, or 36.5%, and Government Retail assets make up 61.4% of all Retail MMFs. The release continues, "Assets of institutional money market funds increased by $7.10 billion to $1.71 trillion. Among institutional funds, government money market fund assets increased by $6.33 billion to $1.56 trillion, prime money market fund assets increased by $480 million to $142.75 billion, and tax-exempt fund assets increased by $300 million to $4.98 billion." Institutional assets account for 63.5% of all MMF assets, with Government Inst assets making up 91.4% of all Institutional MMFs.

Bloomberg writes "Cash Hits Two-Decade Low in Global Investor Portfolio." The piece explains, "Here's another way of thinking about how far stocks have come in nine years. Relative to balances in money market funds and cash among mutual fund managers, the value of global equities is the highest in almost two decades. That observation courtesy of Ned Davis Research, which framed the comparison as an indication "cash is underweight" in Planet Earth's asset portfolio. Another way of describing it is that equities have risen so much from the depths of the financial crisis that their value is blotting out everything else to an extent not seen since the dot-com bubble." Bloomberg adds, "At the end of January, money-market assets sat at about 10 percent of global equity values, the lowest reading since 1998, Ned Davis data show. Since peaking in 2009, the percentage fell sharply throughout the bull market, with much of the slope reflecting the inflation of share prices. They've more than tripled to $26 trillion, while money market assets have fallen 31 percent to $2.7 trillion."

The Bank for International Settlements, in its latest BIS Quarterly Review," features a brief entitled, "Non-US banks' global dollar funding grows despite US money market reform." The piece says, "Despite the loss of dollar funding owing to money market mutual fund (MMMF) reform in the United States, non-US banks' aggregate US dollar funding rose to all-time highs in Q3 2016. In particular, deposits outside the United States have risen strongly, offsetting reduced funding from MMMFs. In aggregate at least, non-US banks are not suffering a dollar shortage as in 2008-09. We estimate that the reform of institutional prime MMMFs, which formally took effect in October 2016, subtracted around $415 billion of dollar funding from non-US banks between September 2015 and December 2016. In some cases, including the largest institutional MMMF, fund sponsors converted such funds into "government-only" funds. In addition, fund investors switched from prime funds to existing government and Treasury-only funds. Both fund conversion and fund switching led to a shrinkage of prime funds' assets by $1.3 trillion over that period. Not all of this came at the expense of non-US banks' funding, given prime funds' investments in US-chartered banks and government paper, and government funds' investment in repos with non-US banks. In the five quarters to end-December 2016, non-US banks lost around $555 billion of US dollar funding from prime MMMFs, but gained approximately $140 billion in repo funding from government MMMFs.... This switch reduced the maturity of non-US banks' MMMF funding." The piece adds, "Overall, we find that non-US banks offset their loss of funding due to US MMMF reform by raising dollar deposits at offices outside the United States and by drawing down excess reserves at the Fed. With less cash, rising loans and the shift to short-term repo funding from MMMFs, foreign branches and agencies in the United States have extended the maturity of their portfolios and taken on more credit risk. However, they collectively still held $630 billion in reserves at the Fed at end-September 2016, a third of the total."

The SEC updated its "Fast Answers" page on "Money Market Funds" recently, which explains, "A money market fund is a type of mutual fund that has relatively low risks compared to other mutual funds and most other investments and historically has had lower returns. Money market funds invest in high quality, short-term debt securities and pay dividends that generally reflect short-term interest rates. Many investors use money market funds to store cash or as an alternative to investing in the stock market. There are many kinds of money market funds, including ones that invest primarily in government securities, tax-exempt municipal securities, or corporate and bank debt securities. In addition, money market funds are often structured to cater to different types of investors. Some funds are intended for retail investors, while other funds that typically require high minimum investments are intended for institutional investors. The rules governing money market funds vary based on the type of money market fund." The piece adds, "Government and retail money market funds try to keep their net asset value (NAV) at a stable $1.00 per share using special pricing and valuation conventions. Institutional prime money market funds must allow their NAV to float based on the current market value of the securities in their portfolios. Money market funds, like all mutual funds, are redeemable on demand. Registered open-end companies (the legal term for mutual funds) may not suspend the right of redemption and must pay redemption proceeds within seven days, except in certain emergencies or for such other periods as the Commission may by order permit for the protection of security holders of the company. In addition, in certain circumstances, non-government money market funds can charge fees on redemptions (liquidity fees) and can suspend redemptions temporarily (redemption gates). Government money market funds can voluntarily opt into using these tools when certain circumstances occur, if the ability to do so is disclosed in the fund prospectus. Finally, a money market fund can also permanently suspend redemptions in certain circumstances if a fund's board of directors decides to liquidate the fund. Before investing in a money market fund, you should carefully read all of the fund's available information, including its prospectus (or summary prospectus, if the fund has one), and its most recent shareholder report. Money market funds are regulated primarily under the Investment Company Act of 1940 and the rules adopted under that Act, particularly Rule 2a-7 under the Act. Unlike a "money market deposit account" at a bank, money market funds are not federally insured."

The final agenda is all set, registrations are still being taken, and final preparations are being made for the Crane Data's inaugural Bond Fund Symposium, the first conference devoted entirely to bond mutual funds. Crane's Bond Fund Symposium will take place March 23-24, 2017 at the Hyatt Regency Boston and will bring together bond fund managers, marketers, and professionals with fixed-income issuers, investors and service providers. Bond Fund Symposium will offer fixed-income portfolio managers, bond investors, issuers, dealers and service providers a concentrated and affordable educational experience, as well as an excellent and informal networking venue. Registrations are still being taken (the cost is $500), and our discounted hotel rate is still available until March 7. Crane Data is also making preparations and now accepting registrations for our "big show," Money Fund Symposium. Our ninth annual Symposium will be held June 21-23, 2017, at the Atlanta Hyatt Regency. We are also preparing the agenda and website our next European Money Fund Symposium, which is scheduled for Sept. 25-26, 2017, in Paris, France. Watch for more details in the coming weeks, and we hope to see you in Boston later this month or in Atlanta in June!

J.P. Morgan Securities' latest "Short-Term Market Outlook and Strategy" provides a rare glimpse inside the world of securities lending reinvestment. It says, "Over the past year, securities lenders have followed somewhat in the footsteps of prime MMFs in terms of balances. While the decline in assets wasn't as dramatic as prime MMFs where we saw $1tn of assets move into government MMFs, we did see a 10% drop in assets under management among securities lenders year-over-year. According to the Risk Management Association (RMA), balances in securities lenders' cash reinvestment portfolios fell $67bn in 2016 to $582bn, the lowest level we have on record." The piece explains, "As we discussed in our 2017 Outlook, securities lenders were a liquidity provider when prime MMFs pulled away from the credit markets in the run up to MMF reform in the second half of last year. Together with other short-term fixed income investors, they helped to absorb money market supply that would have otherwise been bought by prime MMFs.... Clearly, the backup in credit spreads late last year as a result of MMF reform gave an opportunity for non-MMF investors to take advantage of the widening spread environment and capture higher yields. As the data suggests, securities lenders were one of them." JPM also writes, "Interestingly, securities lenders' total allocation to MMFs was largely unchanged throughout last year in spite of MMF reform. `While there appeared to be a shift towards non-2a-7 MMFs (e.g., offshore funds, other liquidity focused funds), the amount invested in SEC 2a-7 funds remained fairly steady. It's possible that within the 2a-7 fund category, a shift took place from prime funds to government funds. But without knowing more details, it’s unclear whether there was a similar aversion to prime MMFs among securities lenders as there was to other institutional investors. Looking ahead, we suspect securities lenders will continue to be an active participant in the short-term fixed income market. While balances will likely trend lower given the impact of regulations (i.e., securities borrowers are increasingly collateralizing their borrowings with securities instead of cash), we think the move will be very gradual in nature. In the meantime, securities lenders will continue to balance liquidity and yield, which could mean more non-traditional repo and floaters given a rising interest rate environment."

A press release entitled, "Fitch Rates San Diego County Treasurer's Pooled Money Fund 'AAAf/S1' tells us, "Fitch Ratings has assigned 'AAAf/S1' Fund Credit Quality Ratings (FCQR) and Fund Market Risk Sensitivity Ratings to San Diego County Treasurer's Pooled Money Fund, a local government investment pool (LGIP), managed by the San Diego County Treasurer's Office. As of Feb. 2, 2017, the fund has approximately $8.8 billion in invested securities. The ratings reflect Fitch's review of the fund's investment and credit guidelines, the portfolio's credit quality and diversification. The 'AAAf' FCQR indicates the highest underlying credit quality (or lowest vulnerability to default). The 'S1' rating indicates a very low sensitivity to market risk. On a relative basis, changes in net asset value are expected to exhibit high stability, showing low relative volatility across a broad range of market scenarios. The main driver of the fund credit rating is the high credit quality of the portfolio. As per the pool's investment policy, the objectives include the safety and preservation of principal, liquidity sufficient to meet operating cash flow requirements and reasonable rates of return or yield consistent with these objectives." Fitch adds, "As of Feb. 2, 2017, the pool mainly invested in government securities, direct agencies, corporate certificates of deposit and commercial paper. Other permissible securities include securities rated at least 'A/F1' by Fitch or equivalent and medium-term notes, FDIC insured deposit accounts, supranational securities and government money market funds. The pool's weighted average rating factor (WARF) is in line with Fitch's 'AAAf' rating criteria of 0.3 or less. WARF is a risk-weighted measure of a portfolio of assets that accounts for the portfolio's credit quality and maturity profile."

An SEC filing explains, "Effective as of February 28, 2017 (the "Effective Date"), SunAmerica Mutual Funds are being rebranded as "AIG Funds." Accordingly, as of the Effective Date, all references to "SunAmerica Mutual Funds" in each Registrant’s Prospectus and Statement of Additional Information will be deleted and replaced with "AIG Funds," and the names of each series of the Registrants included in the chart below (each, a "Fund," and collectively, the "Funds") will be changed to reflect the "New Fund Name." SunAmerica Asset Management, LLC, the investment adviser to each Fund, will continue to serve as investment adviser of the Funds and will retain its current name. In addition, there will be no change in the Funds' investment goals or strategies, portfolio managers, or ticker symbols in connection with the rebranding." The SunAmerica Government Money Market Fund has been renamed the AIG Government Money Market Fund. A statement from SunAmerica Asset Management explains, "This letter is to inform you that American International Group, Inc announced the rebranding of its retail mutual fund family from "SunAmerica Mutual Funds" to "AIG Funds" effective February 28, 2017. The name and logo under which the retail mutual funds are marketed is being transitioned to the AIG Brand. There will be no change to the retail mutual funds' adviser (SunAmerica Asset Management, LLC). In addition to the product rebranding, a new website will be available on February 28, 2017 at www.aig.com/funds."