Fitch: U.S. Money Fund Exposure to Eurozone Rises for Third Consecutive Month
Link to Fitch Ratings' Report: U.S. Money Fund Exposure and European Banks: Signs of Easing
U.S. prime money market funds (MMFs) increased their exposure to eurozone banks for the third consecutive month, according to Fitch Ratings.
As of end-September, MMF exposure to eurozone banks represents 10.6% of total holdings, a 16% increase on a dollar basis since end-August 2012. Fitch notes, however, that overall U.S. MMF eurozone bank exposure remains 70% below end-May 2011 allocations. Fitch believes this level is unlikely to be fully retraced in the intermediate-term given both the lingering investor caution towards the eurozone and banks' diminished appetite for this potentially unstable form of wholesale funding.
Exposure to French banks rose to 3.9% of MMF assets, a new high for 2012 and a 44% increase since the prior period.
In another apparent sign of easing, a declining proportion of European and eurozone exposure was in the form of repurchase agreements (repos). This reduction in secured exposure is another potential sign of a more positive investor posture towards banks in the region.
The 15 largest exposures to individual banks, as a group, comprise approximately 42% of total MMF assets. Only one eurozone banks remains in the top-15, according to the report.
The full report 'U.S. Money Fund Exposure and European Banks: Signs of Easing' is available at 'www.fitchratings.com.' Fitch's analysis is based on the ten largest U.S. prime MMFs, whose holdings represent approximately 45% of total U.S. prime MMF assets.
Additional information is available at 'www.fitchratings.com'.
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