Photos: Companies Stockpiling Cash, Credit Access Still Tight, AFP Survey Shows

42% increase short-term holdings; most move to more conservative vehicles

BETHESDA, Md., June 30 /PRNewswire/ -- With little easing in access to credit,
U.S. organizations are continuing to stockpile cash, according the Association
for Financial Professionals' 2009 Liquidity Survey. Almost three-quarters
(72%) of companies had increased or maintained their U.S. cash balances during
the first part of 2009.

(Photo: http://www.newscom.com/cgi-bin/prnh/20090630/NY39986 )

To view the Multimedia News Release, go to:
http://www.prnewswire.com/mnr/afp/38973/

According to the new AFP survey, 42% of organizations increased their U.S.
cash and short-term investment balances between December 2008 and May 2009,
while 30% saw no significant change in short-term cash balances. More than a
quarter (28%) of organizations saw their U.S. cash and short-term investment
balances deteriorate over the six-month period. Organizations with
non-investment grade ratings were more likely to have seen their cash and
short-term investment balances shrink.

"Despite unprecedented government action, the lack of any significant thaw in
short-term credit access is extremely troubling and many companies are
reacting by stockpiling cash," said Jim Kaitz, President and CEO of AFP.
"While, many organizations with their strong cash positions will be
well-positioned once the economy begins to improve, overall economic
conditions will not improve until organizations can begin using their cash in
activities that foster growth."

The fourth annual AFP 2009 Liquidity Survey was underwritten by The Bank of
New York Mellon.

Despite reports of an easing in the corporate credit markets, over half (59%)
of respondents indicated that their organizations' access to short-term credit
had not changed significantly since the beginning of 2009. A larger percentage
of organizations reported that credit was less available (27%) than those who
indicated that credit access had improved (14%). Two-thirds expect their
access to short-term credit to remain the same over the next year.

Overall, only one-quarter (27%) of organizations expect to decrease their U.S.
short-term cash and investments balances over the next year.

"The turbulence of the present period has had no small impact on the liquidity
needs and practices of individuals and corporations worldwide," said Eric
Kamback, the Bank of New York Mellon's CEO of Treasury Services. "The survey
also revealed that many believe the tightening of available credit will
persist in 2009, so conservative, safety-based investment strategies can be
expected to continue."

Organizations have moved to a more conservative investment strategy for their
short-term balances and have reduced the number of vehicles they use for
short-term investments, allocating 78% of their short-term investment balances
to three safe and liquid vehicles: bank deposits, money market mutual funds
and Treasury securities. The use of commercial paper, separately managed
accounts and auction-rate securities declined significantly over the past
year. While investment policies allow for the use of four or more investment
vehicles, on average, organizations use 1.6 investment vehicles compared to
2.4 options in 2008.

Liquidity Resources:
-- AFP 2009 Liquidity Survey: www.afponline.org/liqreport
-- Interpretive video: www.afponline.org/liqvideo

-- More on cash and liquidity management: www.afponline.org/cashsessions

Source: Association for Financial Professionals (www.afponline.org/about)

SOURCE Association for Financial Professionals

Allan Jordan for AFP, +1-917-881-4845, allan@aejordan.com