Even as money fund players attack the proposed floating NAV requirement, another SEC
money market fund proposal has drawn the ire of industry outsiders. The Wall Street Journal
's Liz Rappaport and Kara Scannell report
that Walt Disney
, American Electric Power
, Avon Products
, CVS Caremark
, Devon Energy
, and the U.S. Chamber of Commerce
among others, have protested the proposed restriction of money market assets to only "the highest-rated securities."
Currently, money funds can put up to five percent of their assets in A2/P2 securities, one notch down from the highest level, and therein lies these outsiders' beefs. These companies often sell some of their commercial paper (some of which is Tier 2) to money funds.
"In many cases, the reduced financing flexibility and increased cost of capital could negatively impact investors in these companies and be directly passed down to consumers in these industries," the chamber wrote in its comment letter to the SEC.
Yet the SEC sees little disruption. The WSJ reports that, according to iMoneyNet
's Money Fund Report
, the MainStay Principal Preservation Fund
was the only money market fund holding Tier 2 commercial paper on September 1. (The Chamber counters that Tier 2 debt interest could pick up as the economy turns around.)
Neil Anderson, Managing Editor
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