BNY Mellon Institutional Cash Fund Hit by Lehman Debt Losses
By Christopher Condon
Sept. 18 (Bloomberg) -- An institutional fund run by Bank of New York Mellon Corp. designed to work like a money-market account fell to less than $1 a share after losses on debt issued by bankrupt Lehman Brothers Holdings Inc.
The $22 billion BNY Institutional Cash Reserves fell to $0.991 a share on Sept. 16, according to an e-mail sent by a bank representative to one client. BNY Mellon has ``isolated the Lehman assets in the fund into a separate structure,'' Ivan Royle, a spokesman for the New York-based company, said today in an e-mailed statement.
The fund invests cash deposited as collateral by clients who borrow securities from BNY Mellon, the world's largest custody bank. Lehman debt represented 1.13 percent of the fund's holdings, according to the statement. Royle declined in an interview to say whether investors withdrawing money from the fund would realize losses.
The BNY Mellon fund, while not a registered money-market fund, is ``generally managed to be compliant with the investment-related provisions of'' U.S. law governing the accounts, according to a bank brochure.
Reserve Primary Fund, the oldest U.S. money-market fund, on Sept. 16 became the first in 14 years to fall below the $1 a share price, known as ``breaking the buck.'' Investors pulled 60 percent of their money from the $62.6 billion fund on Sept. 15 and 16 before withdrawals were delayed.
Money-market funds, considered the safest investments after bank deposits and Treasury debt, strive to preserve a $1-a-share net asset value, meaning that investors can always get back their principal. Companies including Wachovia Corp. have pledged to support their money-market funds with losses linked to Lehman....
Putnam shuts $15 billion money market fund
Thu Sep 18, 2008 1:14pm EDT
BOSTON (Reuters) - Asset manager Putnam Investments said on Thursday that it had closed its $15 billion Prime Money Market Fund due to redemption pressures.
Putnam, a unit of Canada's Great-West Lifeco said in a statement that the board of trustees of its funds had voted to close the institutional money market fund as it faced "significant redemption pressure" on September 17.
"The trustees' action was not related to the portfolio's credit quality, but was instead a reaction to marketwide liquidity issues," the fund company said.
