Crane Data Subscribers
Threat to Money Funds Evaporates; Citi's Pandit Pledges to Back Its SIVs. It appears that the problem that structured investment vehicles, or SIVs, have posed to money market mutual funds, may have reached resolution with the announcement that Citi will support its seven affiliated SIV programs. (See Peter Crane discuss the issue on Bloomberg TV here.) Bloomberg reports that Citi CEO Vikram Pandit said, "After considering a full range of funding options, this commitment is the best outcome for Citi and the SIVs." Citi's Beta Finance, Sedna Finance, and Five Finance, which represent almost $50 billion -- the bulk of remaining SIV assets -- that had been in danger of ratings downgrades, will be brought onto Citi's balance sheet. Money market mutual funds will undoubtedly be relieved by the news, as SIVs without the backing of high quality assets or deep-pocketed banks had represented the last serious threat of losses during the recent credit crunch. With Citi's actions, and news late today that Bank of Montreal is preparing a rescue plan for its Links Finance Corp., it appears that money funds have survived the recent credit crunch without anyone "breaking the buck" and without the handful of bailouts and backings becoming too costly.
