The London interbank offer rates for three-month dollar funds reached a five month low of 2.70625% on Tuesday, but banks still failed to loan money and commercial paper issuance also lags.

 

Although the influx of billions of dollars into the banking system, aggressive rate cuts and Federal Reserve’s backstop of three-month commercial paper have eased the credit crisis, experts it is far from over, Reuters reports.

 

In Europe, for instance, banks deposited a record $364 billion with the European Central Bank. And the daily supply of commercial paper fell for a third straight day on Monday, while no 81-day-plus commercial paper was issued on Monday. By comparison, $7.47 billion worth of longer-term commercial paper was issued on Friday.

 

“We are generally in better shape, but we are not out of the woods,” said Jason Brady, a portfolio manager with Thornburg Investment Management. “The CP market is still a bit of a mess.”

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.