This is not making officials back at the home office happy, and can only mean one more straw on the camel's back that will cause China to continue to distance itself from the dollar.
Sovereign wealth fund, China Investment Corp (CIC), has funds frozen in Reserve Primary Fund (RPF).
RPF suspended redemptions last month when it became the first money market mutual fund to 'break the buck'.
CIC said Wednesday that it had asked RPF to return CIC's funds in full, prior to the US fund's move to freeze redemptions, claiming that the US fund also had sent a written confirmation that it will return CIC's principal in full along with interest.
CIC also claimed to be a creditor of RPF, suggesting it will be among the first in line to be repaid, but an RPF statement indicates it classifies CIC as an investor.
Neither CIC nor RPF have stated how much CIC invested with the fund.
CIC was established by the Chinese government in late 2007 with 200 bln usd in capital. Its mission is to obtain better returns on China's foreign exchange reserve holdings.
Showing posts with label ReservePrimaryFund. Show all posts
Showing posts with label ReservePrimaryFund. Show all posts
Saturday, October 25, 2008
Friday, September 19, 2008
Forget A Seven Day Halt; Reserve Seeks to Halt Fund Redemptions Period; Has $60 Billion In Withdrawal Requests!!
The Reserve said it has filed, on behalf of the Primary Fund and the U.S. Government Fund, an application with the U.S. Securities and Exchange Commission (SEC) seeking an order to be allowed to suspend investor withdrawals or delay redemptions.
"The funds' investment adviser is unable to dispose of securities to fund redemptions without impairing the net asset value of each fund," the company said in a statement.
The Primary Fund has received redemption requests of about $60 billion this week, the company said. And investors have wanted to pull out about $6 billion from the $10 billion U.S. Government Fund, it added.
"The funds' investment adviser is unable to dispose of securities to fund redemptions without impairing the net asset value of each fund," the company said in a statement.
The Primary Fund has received redemption requests of about $60 billion this week, the company said. And investors have wanted to pull out about $6 billion from the $10 billion U.S. Government Fund, it added.
-Robert Wenzel
Thursday, September 18, 2008
ALERT: Reserve Fund Closes Funds To New Investments; Restricts Redemptons on ALL of Its Funds
The Reserve Fund, which early this week announced it 'broke the buck,' and froze redemptions for seven days on its Primary Fund, has annouced that the Reserve is not accepting any new investments and that they may freeze redemptions for up to seven days. The Reserve as of last week is believed to have managed over $60 billion.
Effective September 18, 2008 and until further notice, each Fund named below will no longer offer any class of shares for purchase, except through dividend reinvestment, accordng to The Reserve.
| PRIMARY FUND |
| PRIMARY II FUND |
| RESERVE LIQUID PERFORMANCE MONEY MARKET FUND |
| TREASURY & REPO FUND |
| U.S. GOVERNMENT FUND |
| U.S. TREASURY FUND |
| U.S. GOVERNMENT II FUND |
| of the Reserve Fund |
| INTERSTATE TAX-EXEMPT FUND |
| CALIFORNIA MUNICIPAL MONEY-MARKET FUND |
| CONNECTICUT MUNICIPAL MONEY-MARKET FUND |
| FLORIDA MUNICIPAL MONEY-MARKET FUND |
| MASSACHUSETTS MUNICIPAL MONEY-MARKET FUND |
| MICHIGAN MUNICIPAL MONEY-MARKET FUND |
| NEW JERSEY MUNICIPAL MONEY-MARKET FUND |
| OHIO MUNICIPAL MONEY-MARKET FUND |
| PENNSYLVANIA MUNICIPAL MONEY-MARKET FUND |
| VIRGINIA MUNICIPAL MONEY-MARKET FUND |
| of the Reserve Municipal Money-Market Trust II |
| NEW YORK MUNICIPAL MONEY-MARKET FUND |
| of the Reserve New York Municipal Money-Market Trust |
| ARIZONA MUNICIPAL MONEY-MARKET FUND |
| LOUISIANA MUNICIPAL MONEY-MARKET FUND |
| MINNESOTA MUNICIPAL MONEY-MARKET FUND |
| of the Reserve Municipal Money-Market Trust |
| RESERVE YIELD PLUS FUND |
| RESERVE YIELD PLUS INSTITUTIONAL FUND |
| of the Reserve Short-Term Investment Trust |
Effective September 18, 2008 and until further notice, the following Funds will each price its shares once a day at the indicated time, according to The Reserve. |
12:00p.m. Eastern Time
Interstate Tax-Exempt Fund, California Municipal Money-Market Fund, Connecticut Municipal Money-Market Fund, Florida Municipal Money-Market Fund, Massachusetts Municipal Money-Market Fund, Michigan Municipal Money-Market Fund, New Jersey Municipal Money-Market Fund, Ohio Municipal Money-Market Fund, Pennsylvania Municipal Money-Market Fund, Virginia Municipal Money-Market Fund, New York Municipal Money-Market Fund, Arizona Municipal Money-Market Fund, Louisiana Municipal Money-Market Fund, Minnesota Municipal Money-Market Fund.
2:00p.m. Eastern Time
U.S. Treasury Fund
5:00p.m. Eastern Time
Primary Fund, Treasury & Repo Fund, U.S. Government Fund, Reserve Yield Plus Fund and Reserve Yield Plus Institutional Fund, Reserve International Liquidity Fund Ltd., Reserve USD International Treasury & Repo Fund Ltd., Reserve USD International Treasury Fund Ltd., Reserve USD International Government Fund Ltd.
5:30 p.m. Eastern Time
Liquid Performance Money-Market Fund, Primary II Fund and the U.S. Government II Fund.
These times will now be the cut-off times for each Fund.
Effective September 18, 2008 and until further notice, proceeds from a redemption request for any Fund listed in this release will not be transmitted to an investor for a period of up to seven calendar days after the receipt of the redemption request. Shares do not earn dividends on the day the redemption is processed, regardless of the time the order is received.
The seven-day redemption delay will not apply to debit card transactions, Automated Clearinghouse transactions or check transactions written against your account in connection with any Fund provided that any such transaction from an investor, individually or in the aggregate, does not exceed $10,000.
Run On Money Market Fund: Reserve Primary Fund Lost 60% Of Its Assets To Redemptions This Week
The news on redemptions at Reserve Primary is certainly being kept low key. The only reference to it that I have seen was buried in the third paragraph of a Bloomberg story.
The Reserve Primary Fund lost more than 60 percent of its assets to redemptions this week,according to Bloomberg. Now that's a run on a money market fund.
Reserve Primary had $64 billion in assets, a 60% redemption means over $38 billion would have been pulled.
Reserve Primary announced this week that it had "Broke the buck" on its $1.00 per share net asset value because of some Lehman paper in the portfolio that was marked down to zero. It also announced that it had put a 7 day freeze on redemptions.
UPDATE: MAJOR NEW STORY: The Government Panic of September 2008
-EPJ Newsdesk
The Reserve Primary Fund lost more than 60 percent of its assets to redemptions this week,according to Bloomberg. Now that's a run on a money market fund.
Reserve Primary had $64 billion in assets, a 60% redemption means over $38 billion would have been pulled.
Reserve Primary announced this week that it had "Broke the buck" on its $1.00 per share net asset value because of some Lehman paper in the portfolio that was marked down to zero. It also announced that it had put a 7 day freeze on redemptions.
UPDATE: MAJOR NEW STORY: The Government Panic of September 2008
-EPJ Newsdesk
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
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
We Can See Clearly Now: Money Market Funds Go Transparent
To following should be read while humming the notes from the Johnny Nash song:
I can see clearly now, the rain is gone,
I can see all obstacles in my way
Gone are the dark clouds that had me blind
It’s gonna be a bright (bright), bright (bright)
Sun-Shiny day.
I think I can make it now, the pain is gone
All of the bad feelings have disappeared
In the wake of problems at Reserve Primary Funds, because of holdings of Lehman debt that had to be markdown to zero, some money market funds are announcing that they will list on a daily basis the securities they hold.
Oppenheimer Funds Inc. said it would start posting holdings of its three money funds daily on its web site beginning Thursday.
Daily postings of fund holdings "will provide the transparency that shareholders want from their money market funds," OppenheimerFunds Chief Executive John Murphy said in a message on the firm's Web site.
The firm said its money funds "do not have holdings of some of the companies currently in the news, nor do they have direct exposure to subprime mortgage-related securities."
Invesco Ltd. said today it will start posting daily holdings updates, and said its U.S. money funds have no exposure to troubled financial services companies.
BlackRock Inc., Legg Mason Inc., Charles Schwab Corp. and Federated Investors Inc. were among other firms today that reported their money market funds have no Lehman exposure.
Wachovia money market funds do have exposure to Lehman bad debt, see story here.
I can see clearly now, the rain is gone,
I can see all obstacles in my way
Gone are the dark clouds that had me blind
It’s gonna be a bright (bright), bright (bright)
Sun-Shiny day.
I think I can make it now, the pain is gone
All of the bad feelings have disappeared
In the wake of problems at Reserve Primary Funds, because of holdings of Lehman debt that had to be markdown to zero, some money market funds are announcing that they will list on a daily basis the securities they hold.
Oppenheimer Funds Inc. said it would start posting holdings of its three money funds daily on its web site beginning Thursday.
Daily postings of fund holdings "will provide the transparency that shareholders want from their money market funds," OppenheimerFunds Chief Executive John Murphy said in a message on the firm's Web site.
The firm said its money funds "do not have holdings of some of the companies currently in the news, nor do they have direct exposure to subprime mortgage-related securities."
Invesco Ltd. said today it will start posting daily holdings updates, and said its U.S. money funds have no exposure to troubled financial services companies.
BlackRock Inc., Legg Mason Inc., Charles Schwab Corp. and Federated Investors Inc. were among other firms today that reported their money market funds have no Lehman exposure.
Wachovia money market funds do have exposure to Lehman bad debt, see story here.
-Robert Wenzel
Mutual Fund Industry Group Issues Statement
ICI Statement on Money Market Mutual Funds
Washington, DC, September 16, 2008 - Investment Company Institute President and Chief Executive Officer Paul Schott Stevens today issued the following statement:
"Today, Reserve Management Corporation announced that one of its money market mutual funds is unable to maintain a $1.00 net asset value (NAV), an event triggered by unprecedented market conditions that have affected a wide range of financial firms. This type of event--known as "breaking the buck"--is extremely rare.
"Money market mutual funds have been a successful financial product for millions of investors. Although money market funds are not guaranteed, investors have benefited from the security, liquidity, and diversification that these funds provide under stringent and effective regulation. Today, money market funds hold $3.5 trillion in assets for a wide range of individual and institutional investors.
"ICI is working closely with its members and with regulators, including the U.S. Securities and Exchange Commission and the Federal Reserve, to maintain open communications about market conditions and their impact on funds.
"The fundamental structure of money market funds remains sound. These funds are subject to strict regulation governing credit quality, liquidity, diversification, and transparency. Rule 2a-7, administered by the SEC, strictly limits the types of securities in which money market funds can invest. Securities held by money market funds must be judged highly credit-worthy by both objective and subjective tests, and Rule 2a-7 imposes strict requirements for diversification of assets. The provisions of Rule 2a-7 have operated to help money market funds maintain a stable NAV of $1.00 per share. While not obligated to do so, fund sponsors have voluntarily lent support to their money market funds with credit lines or cash infusions in a number of recent instances.
"In the only previous instance of a money market fund breaking the buck, Community Bankers, a small institutional money market fund, paid investors 96 percent of their principal."
-EPJ Original Documents
What Happens If There Is A Run On Money Markets? Is There A "Money Market Mutual Fund Holiday" Ahead?
News that the Reserve Primary Fund, the oldest mutual fund in the country with $64 billion under management, has broken the buck and frozen resumptions for 7 days, is not good.
Edges of panic are beginning to appear throughout the system. There is a flight to absolute safety. 3-month T-Bills are trading to yield 0.558% ( yield not seen since 1954!). Gold, as I write, is up over $88.50.
Clearly, gold and Treasury bills are the only safe havens in investors eyes. If another money market mutual fund freezes redemptions, all out panic could ensue. How exactly does the government stop that panic? The possibility of freezing all money market funds in a "money market mutual fund holiday," Ã la the Great Depressiom "Bank Holidays", can not be ruled out. The Fed and Treasury would then buy themselves some time to pump money into the entire money market mutual fund system, somehow.
Pray it doesn't come to this, but if money market mutual fund redemptions begin to soar, I see no alternative.
-Robert Wenzel
GM, UBS, Sears Short-Term Debt Costs Soar
Short-term debt costs for General Motors Corp., UBS AG and Sears Holdings Corp. soared as the oldest U.S. money-market fund, Reserve Primary Fund broke the buck and froze redemptions.
General Motors today posted a rate of 5.25 percent for seven-day commercial paper, 1.25 percentage points more than yesterday.UBS, Switzerland's biggest bank, is offering a rate of 3 percent on the seven-day paper, up 1 percentage point .Sears is offering 3.63 percent, or 0.33 percentage point more than yesterday, to issue 30-day commercial paper.
-EPJ Newsdesk
General Motors today posted a rate of 5.25 percent for seven-day commercial paper, 1.25 percentage points more than yesterday.UBS, Switzerland's biggest bank, is offering a rate of 3 percent on the seven-day paper, up 1 percentage point .Sears is offering 3.63 percent, or 0.33 percentage point more than yesterday, to issue 30-day commercial paper.
-EPJ Newsdesk
Tuesday, September 16, 2008
Holy Sh*t: Money Market Breaks Buck; Freezes Redemptions
One the largest money market funds has put a seven-day freeze on investor redemptions after the net asset value of its shares fell below $1.
Reserve Primary Fund, a $64 billion fund managed by money market fund inventor The Reserve, said late Tuesday that its $785 million holding of Lehman Brothers Holdings debt has been valued at zero.
As of 4 p.m., the value of the fund's share was 97 cents. The Reserve said that redemption requests received before 3 p.m. will be paid out at $1 a share.
"Effective today and until further notice, the proceeds of redemptions from The Primary Fund will not be transmitted to the redeeming investor for a period of up to seven calendar days after the redemption," The Reserve said in a statement.
On Monday, Wachovia said it would pump money into three Evergreen money market funds. Evergreen would not disclose how much is being put into the funds.
BlackRock Inc. sent a letter to its money market shareholders on Monday telling them that its funds had no Lehman debt.
"We do not have any holdings of Lehman Brothers paper, nor is Lehman a counterparty to any repurchase agreements in our 2a-7 registered money market funds," noted Simon Mendelson, managing director in BlackRock's COO global cash management group.
Reserve Primary Fund, a $64 billion fund managed by money market fund inventor The Reserve, said late Tuesday that its $785 million holding of Lehman Brothers Holdings debt has been valued at zero.
As of 4 p.m., the value of the fund's share was 97 cents. The Reserve said that redemption requests received before 3 p.m. will be paid out at $1 a share.
"Effective today and until further notice, the proceeds of redemptions from The Primary Fund will not be transmitted to the redeeming investor for a period of up to seven calendar days after the redemption," The Reserve said in a statement.
On Monday, Wachovia said it would pump money into three Evergreen money market funds. Evergreen would not disclose how much is being put into the funds.
BlackRock Inc. sent a letter to its money market shareholders on Monday telling them that its funds had no Lehman debt.
"We do not have any holdings of Lehman Brothers paper, nor is Lehman a counterparty to any repurchase agreements in our 2a-7 registered money market funds," noted Simon Mendelson, managing director in BlackRock's COO global cash management group.
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