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The spring Treasury conference season kicks off next Wednesday, May 5, at the Boston Marriott Copley Place with the Treasury Management of New England'​s (​TMANE) annual show. Crane Data'​s Peter Crane and Dwight Asset Management'​s John Donohue will talk the first afternoon on "​Rising Rates and New Regulations: Monitoring Your Money Funds & Positioning Your Money Market Holdings". The two will discuss the current short-​term investing environment and will review the pros and cons of cash during periods of interest rate hikes and will also review recent changes in money markets and money fund regulations. Other topics of interest include: Cash Investment Management "​101", an "introduction to the investment of cash assets for corporate investors," led by Morgan Stanley Private Wealth Management'​s Tom Kazazes; Fundamental Analysis of Prime Institutional Money Market Funds, presented by Capital Advisors Lance Pan; and, Reform, Ratings and Returns: The New Era of Money Market Funds by Fidelity Investments' Michael Morin. Note too the latest agenda changes for our own Crane'​s Money Fund Symposium, our July 26-​28 conference at The InterContinental Boston.

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Bloomberg writes "​Lampert'​s Hedge Fund Buys Junk-​Rated Paper From Lampert'​s Sears", which says, "Sears Holdings Corp. is bypassing barriers to junk-​rated companies in the $​1.​1 trillion commercial-​paper market by selling the debt to its largest stockholders, including Chairman Edward Lampert. Lampert and his hedge fund, ESL Investments Inc., bought $​150 million of 30-​day commercial paper from a Sears subsidiary in March, the Hoffman Estates, Illinois-​based retailer disclosed in its annual proxy filed April 6.... Companies such as Sears Roebuck Acceptance, whose debt rating from Standard & Poor'​s is four notches below the minimum level for money-​market holdings, are often shut out of the commercial-​paper market. According to U.​S. Federal Reserve figures released April 8, there was about $​883 billion of top-​rated commercial paper outstanding and $​39 billion of debt with the second-​highest grade. The remaining $​168 billion of commercial paper outstanding consists of securities '​ineligible' for purchase by money-​market funds, according to the Fed." Bloomberg quotes Peter Crane, president of Crane Data LLC, a Westborough, Massachusetts, money-​market research firm, "Junk commercial paper is an oxymoron." The piece adds, "​In response to the September 2008 collapse of the $​62.​5 billion Reserve Primary Fund, the SEC tightened restrictions on money-​market investments in January, requiring funds to hold at least 97 percent of their assets in the highest-​rated paper."

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SmartMoney writes "​Money-​Market Funds: Down to Zero". It says, "​Another chapter in the financial crisis is winding down: Not only has the government stopped backing money market funds -- a vote of confidence that the industry can stand on its own -- investors in the now-​closed Primary Reserve Fund are expected to be made almost whole. But that doesn'​t mean that money-​market-​fund investors don'​t have anything to worry about. For investors who haven'​t glanced at their account statements lately, the latest problem is near-​zero interest rates. While the Primary Fund announced this week that it has sold the remainder of its Lehman Brothers debt (​and will come close to paying investors all of their money back), money-​market-​fund yields are barely a ripple in the income stream. With rates so low, several fund companies have been subsidizing fees for investors." It adds, "The safety and liquidity of money-​market funds could improve this year. In January, the Securities and Exchange Commission amended regulations governing money-​market funds, and those changes will start taking effect in May.... According to an SEC statement, that means money-​market funds will have to meet both daily liquidity requirements of 10% of assets in cash and cash equivalents, and weekly liquidity requirements of 30%. The good news is, these changes could help quell the fear of a repeat "​breaking the buck" scenario, when a money-​market fund trades below a dollar, says Peter Crane, president of Crane Data, which tracks money-​market funds. On the other hand, they could also mean that yields will drop a bit as a result."

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MarketWatch'​s Chuck Jaffe writes "​What to do when the Fed puts up a fight". It says, "[​W]​ith many investors now convinced that a rate hike is in the offing, it makes sense to consider what changes, if any, you should make to your portfolio. Truth is, one rate hike -- if and when it happens -- is a headline event, not something that demands immediate reaction. Only after a second move, or maybe a third, will rising rates warrant a response from the average investor.... Indeed, for many investors, the impact of a rate increase will be negligible and temporary. Investors in money-​market funds, for example, can expect that fund management will keep the bulk of a rate hike for itself, recapturing fee waivers that have allowed it to deliver positive returns while rates were practically zero." MarketWatch continues, "Peter Crane of Crane Data, which publishes Money Fund Intelligence, said that money fund costs have dropped to 0.​25% from roughly 0.​4% thanks to waivers that funds put in place in order to keep returns positive. If there is a rate hike, he expects the funds to grab back most of their pay before passing it along to investors." Crane says, "Of a quarter-​point hike, investors will probably split that with the fund company. It will take two hikes to remove the fee waivers entirely, assuming quarter-​point increases. The Fed has never made just one increase -- they have always taken one step and then another and another -- but investors won'​t really start to feel a difference in their money-​fund returns until you get to the second increase, or maybe the third."

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Monday'​s Wall Street Journal writes "​Money Funds Face New Rules". It says, "New rules designed to bolster the safety of money-​market mutual funds will soon put pressure on already low yields -- and could force more firms to exit the business. Starting in May, the Securities and Exchange Commission will require money funds to hold more liquid and high-​quality assets. While the changes are designed to help funds better weather trouble, they come at a tough time for the industry." The Journal cites Pete Crane, "The safeguards could reduce yields by about 0.​1 to 0.​2 percentage point in a more normal interest-​rate environment.... But if the Federal Reserve starts to raise short-​term rates, as some expect it might do later this year, the higher rates should more than outweigh the additional costs, he says." It adds, "It probably will take two quarter-​point rate increases before money-​fund advisers reinstate all of the fees they have waived, Mr. Crane says." In other news, see Pensions & Investments' "​Henderson leads pack to acquire RidgeWorth from SunTrust", which says, "Henderson Group PLC has emerged as the leading bidder for the bulk of SunTrust Bank'​s money management arm, Atlanta-​based RidgeWorth Capital Management Inc., according to bankers and industry executives, who declined to be named.... Sources say Henderson Group is interested in the group'​s roughly $​36 billion of non-​money market assets."

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The Wall Street Journal writes "​Money-​Fund Assets Fall Under $​3 Trillion, ICI Says. It says, "Cash has been leaving money-​market funds as investors seek higher returns than the funds can offer; their yields have been close to zero for months. In addition, seasonal factors are likely at play." The WSJ quotes Peter Crane, president of Crane Data LLC, "Last year, it was retail investors; this year, it'​s institutional investors that are moving out of money-​market funds. In general, the zero yields are driving investors to everywhere but cash." The Journal adds, "​Institutional investors can now get relatively competitive yields in Treasurys, government securities and repos, which they haven'​t had in years, he said. Money is likely moving from money-​market funds into separate accounts and bond funds, and even corporations are likely reallocating cash, Mr. Crane said." Finally, it says, "Meanwhile, the release of the long-​awaited President'​s Working Group on Financial Markets report, which will make recommendations to further reduce money funds susceptibility to a run, is imminent, Mr. Crane said."

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Bloomberg writes "​BlackRock'​s Fink Snubs '​Socialized' Money-​Fund Industry Plan". The article says, "Laurence Fink, chief executive officer of BlackRock Inc., stands alone among the biggest U.​S. money-​market fund providers in opposing a proposed safety net for the industry that manages $​3 trillion for investors. Fink, who has said companies should set aside their own capital cushions, won'​t back a plan to spread risk among money-​market mutual fund firms.... JPMorgan Chase & Co., Federated Investors Inc., Vanguard Group Inc., Goldman Sachs Group Inc. and four other firms have endorsed the plan, which was proposed by the industry'​s trade group last month." Bloomberg quotes Peter Crane, "`​Larry Fink has invested a lot of time and energy on an alternative idea, talking about capital reserves." Bloomberg adds, "BlackRock'​s dissent may make it harder for money funds to head off regulatory changes that could include an end to the stable $​1 net asset value that made the funds a popular alternative to bank accounts.... The industry has planned since last year for an emergency-​liquidity facility that would protect money-​market mutual funds that invest in corporate debt, stepping in to buy securities at face value in the event of a financial crisis."

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