U.S. prime money-market funds, which offer short-term lending to corporations and banks, have reduced their lending to European banks as the region’s sovereign debt crisis mounts.
Increased use of equities collateral in the U.S. market for borrowing and lending securities may heighten regulators focus on the risks of rapid asset sales disrupting financial markets, according to Fitch Ratings.
European banks dominated a list of top issuers to U.S. prime money-market funds, accounting for 44 percent of assets, according to a report by Fitch Ratings.
"One reason for the equity-backed repo increase is because of the higher yield available on them, that is, from the lenders perspective."
- Robert Grossman on Feb 12, 2014