Wednesday, September 17, 2008

Wachovia Money Market Funds Have Exposure To Lehman Brothers Bad Debt

Wachovia Corp. said three money funds offered through its money management subsidiary Evergreen Investments did have exposure to Lehman Brothers, which filed for bankruptcy Monday. The funds are Evergreen Institutional Money Market Fund, with 1.94 percent of total assets held in Lehman debt as of the close on Friday, before Lehman's collapse; Evergreen Money Market Fund, with 1.66 percent; and Evergreen Prime Cash Management Fund, with 0.97 percent.

Yesterday, the oldest money market mutual fund in the country said its $64 billion Reserve Primary Fund "broke the buck", i.e. traded below $1.00, because of Lehamn debt securities it held that had to be marked down to zero. The fund also froze all redemptions for seven days.

Wachovia, on the otherhand, said it "will support the value of Lehman credit held in the funds" by pouring cash into the funds from the parent company to ensure the funds don't fall short of maintaining at least $1 for every dollar invested in them.

-EPJ Newsdesk

1 comment:

  1. Now that it's 2010, we can all look back on this and breathe a sigh of relief. I know it shakes up the market when any money market fund breaks the dollar, let alone such a big one. That being said, the markets are now well stabilized.