RPT-Fitch: U.S. Money Market Funds Signal Tentative Retreat from Eurozone in Holdings

Tue Apr 30, 2013 3:05am EDT

April 30 (Reuters) - (The following statement was released by the rating agency)

U.S. prime money market fund (MMF) exposure to Eurozone banks declined in March 2013, likely reflecting investor concerns over recent events in Italy and Cyprus, according to Fitch Ratings.

As of end-March 2013, MMF allocations to Eurozone banks represented 13.2% of assets under management within Fitch's sample, a decline of 19% on a dollar basis relative to the end-February level of 16% of MMF assets. Despite this recent decline, Fitch notes allocations to Eurozone banks have increased by over 70% since end-June 2012 when European Central Banks (ECB) actions led to relative stabilization of market sentiment.

Canadian banks remained the largest single country exposure at 13.4% of assets, a 9% increase since end-February. In aggregate, MMF allocations to Canadian, Japanese and Australian banks represented approximately one-third of total assets in Fitch's sample versus approximately 20% of assets as of end-May 2011. Australian, Canadian and Japanese banks collectively represent 10 of the top-15 largest exposures of MMF assets in Fitch's sample, with just three European institutions in the top-15.

The proportion of eurozone exposure in the form of repos, at slightly more than 20% of these banks' collective exposure, remains well below the levels of roughly 40% of exposure experienced during the height of the crisis last summer.

The full report 'U.S. Money Fund Exposure and European Banks: Decline Amid Eurozone Concerns' is available at 'www.fitchratings.com'.

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