Bond Buyer writes "A Moody's B of A Downgrade Could Crimp Money Funds". It says, "When Moody’s Investors Service put the short-term credit rating of Bank of America under review for a downgrade back in February, that stirred up the water for tax-exempt money market funds. In fact, Moody's placed the credit ratings of many large financial institutions under review. But BofA provides the credit backing for a huge amount of short-term municipal securities -- variable-rate demand notes and obligations -- that money market funds have purchased. And if Moody's actually lowers the short-term rating for the bank even one notch to tier 2 from its current tier 1 status, that could force tax-exempt money market funds to sell many of their VRDOs. [Crane Data Note: This is incorrect. Rule 2a-7 rarely forces selling and a single downgrade wouldn't make anything "tier 2".] In turn, the downgrade of so large a player in the short-term market would drive down the interest rates for credits backed by the few remaining tier 1 liquidity providers. Alternatively, it would reset at higher interest rates the paper supported by the now-tier-2-rated bank." In other news, ICI released its latest "Money Market Mutual Fund Assets", which says, "Total money market mutual fund assets decreased by $15.49 billion to $2.622 trillion for the week ended Wednesday, March 21, the Investment Company Institute reported today. Taxable government funds decreased by $5.33 billion, taxable non-government funds decreased by $9.51 billion, and tax-exempt funds decreased by $650 million."
