New regs take risk out of repos

Article Abstract:

Regulations of the Government Securities Act of 1986 pertaining to securities repurchase agreements makes these agreements safer and easier to transact for corporate cash managers. Actual repossession of the instruments in question is no longer required. . Dealers must put all hold-in-custody agreements in writing. For absolute safety, actual repossession of the instrument is advisable, but is also more expensive. A new master repurchase agreement has been developed for general use. This pre-formatted agreement cuts transaction time, expenses, and worries. The new rules also have implications for government securities broker-dealers that protect corporate cash managers. For example, a new dealer requirement is to hold repurchase agreements in lien-free, segregated accounts.

Laws, regulations and rules, Repurchase agreements

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Unrated CP offers high yields, modest short-term risk

Article Abstract:

Drexel Burnham Lambert Commercial Paper Inc is a leader in the unrated commercial paper (CP) market. Drexel Burnham and other unrated CP issuers have had substantial success selling to corporate cash managers, the largest buying group for CP. Unrated CP instruments offer impressive returns for corporate short-term investors. Avis Inc and USX Corp are examples of unrated CP issuers. It is not necessarily a risk to buy CP from corporations such as USX that are basically sound, but have fluctuating debt levels. It is also worth considering companies that are deteriorating, but which have a chance of rebounding.

Evaluation, Securities, Commercial paper, Commercial paper (Financial instruments), Avis Rent a Car Inc., Marathon Oil Corp., Drexel Burnham Lambert Commercial Paper Inc.

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