US Corporate Treasurers Investing Accumulated Cash More Conservatively

US-based businesses accumulated cash at an accelerated pace during the second quarter of 2014 and invested those assets more conservatively, according to the Association for Financial Professionals' Corporate Cash Indicators (AFP CCI).

The AFP CCI measure changes in corporate cash holdings quarter-to-quarter and year-over-year, as well as the expected change in short-term investment and cash accumulation in the coming quarter.

But the burst in cash accumulation is expected to be short lived.

For the second quarter of 2014, the indicator measuring the quarterly change in cash holdings is up eight points from the April reading at +12.  The year-over-year indicator surged 22 points to +27, indicating a much faster pace of cash accumulation.

Meanwhile, the indicator for short-term investment aggressiveness dropped from +10 to a reading of +2, indicating that companies had become more conservative in their short-term investments, or that they were becoming more restrictive in selecting among short-term asset classes and credit qualities.

Looking ahead, corporate treasurers anticipate a slower pace of cash accumulation.  The forward-looking indicator measuring expectations in the change of cash holdings dropped two points to a reading of +10.

“Uncertainty around money market mutual funds has finally settled and corporate treasurers can move on,” said Jim Kaitz, AFP’s president and CEO.  “Businesses are moving their cash to other ultra-safe short-term investment vehicles as they seek opportunities to deploy their investment holdings.”

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