Legg Mason Inc. and SunTrust Banks Inc. are propping up money-market funds to cushion them from possible losses on debt issued by structured investment vehicles.
Legg Mason invested $100 million in one of its money funds and arranged $238 million in credit for two others, the Baltimore-based company said in a Nov. 9 regulatory filing. SunTrust Banks Inc. received approval from regulators last month to protect two money funds that bought debt from Cheyne Finance Plc if the SIV is unable to repay the Atlanta-based bank.
The 10 largest managers of U.S. money funds have $50 billion in SIV debt, some issued by vehicles such as Cheyne that defaulted because of losses from securities linked to subprime mortgages, according to reports from the companies. At least three companies -- Legg Mason, SunTrust and Wachovia Corp. of Charlotte, North Carolina -- have stepped in to make sure their funds don't ``break the buck,'' or fall below the $1 a share net asset value that all funds strive to maintain.
``This is the first real case'' of securities held by money-market funds defaulting, said Peter Crane, founder of Crane Data LLC, the Westborough, Massachusetts-based publisher of the Money Fund Intelligence Newsletter.
Money funds, considered among the safest investments, loaded up on asset-backed commercial paper with the hope of increasing returns. Asset-backed commercial paper maturing in 90 days yielded an average 5.3 percent this year, 0.6 percentage point more than Treasuries with similar maturities, data compiled by Bloomberg show.
stockmarketreview.net
Подписаться на:
Комментарии к сообщению (Atom)
Комментариев нет:
Отправить комментарий