Another Regulatory Casualty

2 min read

Upheaval and change seem to be the new normal for the short-term cash markets these days. A few weeks ago, General Electric announced the upcoming divesture of the majority of its finance business, a move that will reverse its status as a ‘non-bank systemically important financial institution’ (non-bank SIFI). The news is just the latest in a string of industry announcements that are reshaping the landscape for short-term cash investors. While GE’s action should be a net positive credit event for both creditors and bondholders, the divestiture will further constrain the already diminished supply of short paper available to cash investors as the company currently serves as the largest direct issuer of commercial paper in the short-term markets. At the same time that the supply of issuance is being withdrawn by banks and industrial names, traditional money fund solutions are being dramatically recast by federal regulators. We expect to see significant shifts in asset flows and investment preferences as the money market fund industry and market participants begin to adjust to the new reality.

To help you sort through the myriad of developments, Capital Advisors Group is hosting a Webinar series, “The Paths Forward”, that discusses these changes and outlines strategies and tactics to realign cash investment programs to best respond to the post-regulatory world. The April 10th edition of CraneData.com News reported a summary of part one of the series and part two will be held on May 11th at 2:00ET (link for registration). We hope that the webinars provide you with clarity regarding the ongoing changes in the cash investment markets and with tactical options for investors to maintain safety, liquidity and return potential in their cash investments. And for you today, this month’s newsletter takes a closer look at the impact that GE Capital’s divestiture may have on the short term debt markets.

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Best Regards,

Ben Campbell
President & CEO

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