Credit & Risk

Don’t Bank On It

2 min readEmerging signs of stabilization in the credit markets, while a welcome sign, should not result in complacency among corporate cash investors. Risk levels are still elevated in several cash investment sectors and the recent government bailout and restructuring of CitiBank demonstrate that surprises in the banking sector are likely not over. And while Citi’s “too…

The Top Three Risks in Money Fund Investing

The Top Three Risks in Money Fund Investing

2 min readExecutive Summary A. Recent market turmoil uncovered rising systemic risks among money market funds: Regulatory rules failed to adequately address investment risks Defending the constant $1 share value became more difficult Money funds as commingled vehicles have inherent drawbacks B. Key factors in money market fund selections: Focus on the wherewithal of the funds’ sponsors…

Controlling Hidden Exposures in Cash Portfolios

Controlling Hidden Exposures in Cash Portfolios

3 min readRecent credit market events have stress-tested corporate cash portfolios more than at any time I can recall in my 28-year investment career. These events are shocking in scope and have threatened our financial system in ways not seen since the Great Depression. Because it’s so easy to “lose sight of the forest” in this unprecedented…

Controlling Risk in a New Environment

2 min readSince August 17, 2007 there have been more than 40 separate measures announced by the Fed and Treasury designed to stabilize the credit markets. The most recent programs follow a similar remediation course to that of past credit bubbles that required direct government investment in banks and deposit guarantees by sovereign governments. These recent measures,…

Credit Considerations – Money Market Funds

Credit Considerations – Money Market Funds

3 min readIn light of this week’s failed vote on the Troubled Asset Relief Program (TARP), we wanted to share some credit considerations with you. Companies may want to evaluate non-2a-7 bank money market deposit accounts (MMDA’s) with balances greater than $100,000, the FDIC coverage limit per bank (the FDIC insurance limit may increase to $250,000 if…

What We’ve All Learned From The Auction Rate Debacle

1 min readI understand that not all recipients of our monthly newsletter would have been affected by the meltdown of the auction rate securities market; however, the structure of the recent broker-dealer/SEC settlements may pique the interest of many corporate treasurers. Of specific interest to us is the manner in which institutional investors have been largely left…

Digging out of The Rubble

Digging out of The Rubble

3 min readExecutive Summary Institutional cash investors continue to face uncertainties and difficult choices in ultimately obtaining liquidity despite the latest liquidity announcements. Interests of institutional investors have taken a back seat in these settlements. The distinction between retail and institutional investors seems arbitrary and illogical. To avoid their own reputational risk, we think that the secondary…

Why Housing Will Bear the Burden of the Credit Recovery

1 min readIn real estate investing, we all know the old adage is location, location, location. And, as an extension, the three most important factors we’re looking to for signs of stabilization in the credit market are housing, housing, housing. Over the past 12 months we have seen national home prices plummet 15.5%, existing home sales decline…