Refinancing risk for most EMEA non-bank financial institutions (NBFIs) amid rising interest rates is modest in 2023 due to limited debt maturities, generally sound liquidity and often cash-generative business models, Fitch Ratings says. However, debt maturities in 2024 and beyond are larger and an inability to refinance upcoming maturities at reasonable terms would weigh on...

Challenging macroeconomic conditions, geopolitical tensions and political polarisation are contributing to increased short-term scepticism about the importance of ESG considerations by corporations, investors and governments, but the long-term outlook for sustainable finance remains solid, Sustainable Fitch says in its ESG outlook for 2023. We expect to see a stronger focus on implementation of net-zero and...

Fitch Ratings’ 2023 sector outlook for global money market funds (MMFs) is deteriorating, reflecting Fitch’s expectations for deterioration in some key banking sector outlooks, continued market volatility and potential considerable flow and asset under management (AUM) dynamics. Evolving global regulation will be key, but should have sufficient lead time for market participants to react accordingly....

Sustainable Fitch has launched its ESG Ratings product for investors. ESG Ratings, Data & Analysis offers granular and transparent ESG ratings and sub-scores at an entity, framework and instrument level. ESG ratings are provided on an absolute and fully cross-comparable rating scale, with qualitative commentary from ESG analysts, produced via robust processes that ensure the...

Sustainable Fitch has announced the launch of its ESG Scores for Leveraged Finance. The ESG scores provide the CLO investment community with an absolute scoring system which allows granular assessment of environmental, social and governance factors for leveraged finance entities and labelled issuance. Sustainable Fitch’s ESG Entity Scores (ESG.ES) are an independent view on a...

London: Fitch Ratings estimates that assets under management (AUM) in money market funds (MMFs) classified under Article 8 (A8) of Europe’s Sustainable Finance Disclosure Regulation (SFDR) reached EUR600 billion at end-2021, or 39% of total European MMF AUM, up from 36% at end-3Q21. Fitch is aware of a number of planned or pending fund conversions to...

London: Decentralised finance (DeFI) could divide into regulated and unregulated segments as regulators increase their focus on the sector’s risk profile, Fitch Ratings says in a new report. We expect many providers to submit to regulation to support their market credibility, but some may look to operate outside rules-based ecosystems so that they can be more...

London: A recent Fitch Ratings study found that, at end-2021, over a third of European short-term bond funds (STBFs) considered environmental or social aspects, among other characteristics, when making investment decisions. Such funds are classified under Article 8 of the EU Sustainable Finance Disclosure Regulation (SFDR). Fitch defines STBFs as fixed-income funds with a target duration...

Fitch Ratings’ 2022 sector outlook for global money market funds (MMFs) is neutral, reflecting expectations for a stabilising credit environment, modestly rising interest rates in major developed economies and manageable flow and asset under management (AUM) dynamics. Evolving MMF regulation brings uncertainty, but, given the length of previous regulatory review cycles, should give sufficient time...

London – Fitch Ratings believes that stablecoins will become increasingly relevant constituencies in the short-term credit markets. The market capitalisation of stablecoins has increased rapidly, and the security portfolios of stablecoins are typically invested in short-term securities such as commercial paper (CP). Fitch’s dashboard presents information on the overall stablecoin market, and aggregates information on...

European traditional investment managers (IMs) are increasingly focusing on the investment impact of environmental, social and governance (ESG) factors, particularly environmental sustainability, Fitch Ratings says in a new report. The process has accelerated, helped by the EU’s Sustainable Finance Disclosure Regulation, which aims to make funds more transparent and easier to differentiate with respect to...

Hong Kong/London: The broader adoption of general-purpose central bank digital currencies (CBDCs) will present authorities with trade-offs between the associated risks and benefits, says Fitch Ratings. The key benefits of retail CBDCs lie in their potential to enhance authority-backed cashless payments with innovations in step with the wider digitalisation of society. For central banks in...

London: ESMA’s recent consultation report considering the potential elimination of the dominant fund type in Europe, low-volatility net asset value (LVNAV) money market funds (MMFs), while retaining variable net asset value (VNAV) funds, has increased investor interest in short-term (ST) VNAVs. Fitch Ratings estimates ST VNAV MMFs represented around 10% of MMF assets in Europe...

London – Supply chain finance funds (SCFs) face an uncertain future following the recent suspension and liquidation of several open-end mutual SCFs with links to the failed supply-chain finance company Greensill Capital, Fitch Ratings says in a new report. Fallout from the situation is likely to damage investor confidence in SCFs and may trigger additional...

Fitch Ratings has affirmed the ratings of nine J.P. Morgan short-term money market funds (ST MMFs) and one J.P. Morgan standard money market fund (MMF). The ST MMFs and standard MMF are managed by J.P. Morgan Asset Management (UK) Limited (euro- and sterling-denominated funds) and J.P. Morgan Investment Management Inc (US dollar-denominated funds). Key Rating...

Fitch Ratings estimates that assets under management (AUM) in global ESG-oriented money market funds (MMFs) increased by around 50% to EUR123 billion by end-2020. In contrast, growth of all global MMFs was only around 20% in the same period. The ESG MMF growth was driven primarily by funds converting to an explicit ESG approach. AUM...

The US and the UK/EU are on different regulatory pathways regarding ESG but the long-term structural trends in favour of ESG investing will persist, says Fitch.

The fund was launched to provide moderate liquidity while maximising income and preserving capital via investing in investment-grade fixed-income securities.

European non-government short-term MMFs account for a limited share of European commercial paper (ECP) issued by non-financial corporates.

Fitch Ratings has downgraded CSOP US Dollar Money Market ETF's International Fund Credit Quality Rating to 'AA+f', from 'AAAf'.

European low-volatility net asset value money market funds’ (MMFs) flows have stabilised since a volatile period in March 2020 for all currencies.

Declines in asset values as a result of the pandemic are likely to put pressure on the balance-sheet leverage of rated European investment companies

Fitch Ratings has assessed the rating vulnerabilities of global financial institutions (FIs) during a coronavirus downside scenario in a recently published report.

This criteria report focuses on the key rating considerations when assessing the capacity of an MMF, or of other liquidity- or cash-management products.

At least 76 European mutual funds gated in March 2020 due to increased demand for withdrawals from investors concerned by financial market volatility.

Fitch Ratings has revised its sector outlook for European low volatility net asset value (LVNAV) money market funds (MMFs) to negative from stable.

In the longer term, if ESG becomes common in traditional MMFs, demand for named ESG MMFs may decrease.

The European high-yield bond fund sector appears to be operating with significant liquidity risk.

Fitch Ratings expects ratings to remain stable across its portfolio of global money market funds (MMFs) in 2019.

The reforms became effective for new funds on 21 July and will apply to existing funds from January next year.

Green bond funds are rapidly emerging as a sub-asset class in fixed-income funds as investor demand for "green" investments grows.

The probability of a discretionary or mandatory liquidity fee or redemption gate being imposed on European money market funds (MMFs) post-reform is low, absent a systemic shock or idiosyncratic credit event.

Fitch Ratings has launched 'MMF Compare', a new European money market fund (MMF) interactive comparison tool to provide investor education.

A recurring shortage of overnight deposit and repo facilities around year-end will leave European money market funds increasingly dependent on custodian banks for managing their liquidity.

Fitch Ratings believes that the likelihood and impact of fund liquidity mismatch risk has increased to a record high in 2016. 

Changes made to Italy's insolvency laws since mid-2015 and measures introduced to reduce the length of time creditors need to wait before settling claims are positive, but we are still at an early stage and reforms have yet to be put into practice, says Fitch Ratings.

The European Central Bank's decision to cut its deposit rate and extend quantitative easing is likely to push euro money market fund yields further below zero, adding to the challenge funds face in maintaining assets under management, Fitch Ratings says.

Fitch Ratings says that investors are accepting negative euro money market funds' yields as they face the lack of low-risk alternatives and amid heightened risk aversion at a time of market stress, as was the case over the summer.

Fitch estimates ITs used a total of GBP6bn of leverage as of end-March 2015, a fraction of the absolute size of US taxable CEF leverage (USD54bn; GBP35bn). US leverage ratios are typically reported gross, and can use derivatives off balance-sheet.