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High-Grade Investors Hoard Cash: Morgan Study

28 Jan 2005

Cash is mounting on the sidelines of the investment-grade corporate market and investors are decreasing their corporate allocations, according to a recent J.P. Morgan's survey of 50 institutional investors.

Cash is mounting on the sidelines of the investment-grade corporate market and investors are decreasing their corporate allocations, according to a recent J.P. Morgan's survey of 50 institutional investors. Nearly 65% of the investors polled have what they consider high or medium cash positions, which is an 8% increase from the beginning of the year and an almost 20% jump from the beginning of December. The survey also reveals investors are decreasing their corporate allocations, with 30% holding overweight positions, down from 40% in the previous survey. Ed Marrinan, head of North America investment-grade strategy at J.P. Morgan, did not return calls by press time.

John Tierney, credit strategist at Deutsche Bank, noted investors normally accumulate cash at the beginning of the year and typically reinvest through the primary market. But with a thin high-grade pipeline, some investors have moved their allocations away from the corporate sector and Tierney expects investors will continue to shift away from corporates.

28 Jan 2005