Liquidity at a US$2.2 billion prime money-market fund run by Northern Trust Corp fell below the key 30per cent U.S. regulatory threshold twice last week, but rebounded above that level after the U.S. Federal Reserve shored up the industry.
The Northern Prime Obligations Portfolio disclosed that its weekly liquidity level fell to 27per cent of assets twice last week, according to the fund's website - reducing its buffer for quickly converting assets into cash to meet investors' redemptions. "On Wednesday, the Federal Reserve Board announced the establishment of a Money Market Fund Liquidity Facility," Northern Trust spokesman Doug Holt said."This has been helpful to facilitate liquidity for institutional and retail prime money market funds that want to sell credit investments."
And JPMorgan's US$45.6 billion Prime Money Market Fund weathered nearly US$13 billion in withdrawals last week, pushing down its weekly liquidity ratio to 35per cent on Friday, from 40per cent earlier in the week, JPMorgan disclosures show. A fund's weekly liquidity level is published daily by prime money market funds. BlackRock called the ratio an"amber flashing light" for investors, in a report published this month for its clients.
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