13 min readCo-authored by: Matthew Paniati, CFA® DOWNLOAD FULL REPORT Abstract BBB-rated debt continues to offer new possibilities for cash investors. Though it involves taking on incremental credit risk, allowing the purchase of these securities may help alleviate supply shortages while also offering additional return opportunities. Should investors investigate adding BBB names to their portfolios, we recommend…
14 min readDOWNLOAD FULL REPORT Abstract The popularity of responsible investing has extended to the fixed income and liquidity management fields in recent years. Incorporating environmental, social and governance (ESG) issues in cash investment decisions makes sense as part of overall credit risk management. In addition to challenges related to disclosure, criteria, measure and verification, liquidity portfolios…
13 min readDOWNLOAD FULL REPORT Abstract The March Federal Open Market Committee (FOMC) decision was a major market event that directly resulted in an inverted yield curve. The Fed’s interest rate and growth outlook change echoed other recent moves by central banks that may indicate the end of a tightening monetary cycle. The inverted curve may be…
14 min readAbstract We have identified the Fed and a flattening yield curve, trade wars and a global slowdown, and Brexit and other uncertainties as the three main themes to watch in 2019. Compared to 2018, we think 2019 will be a bit more challenging for short-term liquidity investors. A flatter yield curve may attract more non-traditional…
13 min readAbstract Many liquidity investors came to know commercial paper (CP) through holdings in prime money market funds (MMFs). We notice higher interest in direct CP investing since the 2016 MMF reform. This paper provides an overview of the market over the last decade and evaluates financial vs. non-financial, U.S. vs. foreign, and Tier 1 vs….
10 min readAbstract The evolving treasury cash investment landscape and yield disadvantage of bank deposits have prompted many practitioners to look for alternative options for managing their excess cash. We address this topic in a generalized manner, summarizing three major categories of available cash investment vehicles: deposits, pooled assets and direct purchases. The pros and cons of…
11 min readAbstract Experience has taught us that counterparties can fail with little warning. Counterparty risk management has become more challenging in recent decades due to concentrated exposures, complex financial instruments and evolving bank credit. Corporate and treasury organizations should manage this risk proactively, have an integrated risk policy across business lines, diversify risk by setting exposure…
9 min readAbstract Deposit rates are starting to increase as we move further into a rising rate environment. Banks still have not rewarded depositors sufficiently with a 21% average deposit beta, although some executives expressed moving it above 50%. The wait for higher rates continues unless depositors are willing to consider market-based instruments. There, several options exist…
3 min readAbstract Offshore institutional money market funds (MMFs) have largely sat in the periphery for US-centric liquidity investors, but European reform and repatriation of overseas profits may result in transformational changes. Offshore fund investors will have few alternatives other than low volatility net asset value (LVNAV) funds. Public debt funds may not accommodate large inflows. A…
4 min readAbstract For institutional cash investors unsure of separately managed accounts in a rising interest rate environment, our scenario analysis suggests that a laddered portfolio of agency and corporate securities with a modest WAM could outperform the government money market fund proxy with negligible unrealized loss concerns. Both agency and corporate portfolios with maximum maturities of…