Money-Market Funds Cut Europe Bank Investments to Lowest Ever

Money-market funds in the U.S. cut short-term holdings of European bank debt last month to the lowest levels ever recorded by Fitch Ratings.

Investments in certificates of deposits, commercial paper and other short-term debt issued by European lenders declined to 42.1 percent of the funds’ holdings in August from 47.2 percent a month earlier, according to a Fitch report. That’s the lowest since Fitch started compiling the survey in 2006.

“Market pressure on short-term liquidity is in general a concern, but it has to be considered in the context of each bank’s broader current funding and liquidity dynamics,” Fitch analysts including Robert Grossman said in the report.

Investments by money-market funds in French banks on a dollar basis declined 19 percent in August, while holdings of U.K. bank debt fell 14 percent, according to the report.

Funds increased their exposure to German banks by 8 percent, and by 4 percent in Nordic banks.

The report is based on public filings released by money market funds that oversee $676 billion of assets, about 45 percent of the total held by money-market funds in the U.S.

To contact the reporters on this story: Esteban Duarte in Madrid at

To contact the editors responsible for this story: Paul Armstrong at

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