OREANDA-NEWS. February 16, 2015. This week's edition of Fitch Ratings' 'Inside Credit' features top stories on Chinese banks' AT1 issuance and U.S. money funds' increasing investment in the Fed's Reverse Repo Program (RRP).

Large Chinese banks represented nearly 90% of additional Tier 1 (AT1) instruments issued by banks globally in the fourth quarter of 2014, up from nearly zero in prior quarters. Chinese banks are now the third largest issuers of AT1 instruments behind UK and Swiss banks, representing approximately 20% of total AT1 and other capital-trigger instruments in Fitch's AT1 Tracker Tool.

"AT1 issuance by Chinese issuers is expected to tally at least USD50 billion in the short term," says Christian Kuendig, Senior Director. "However, strong issuance from European banks will help bolster the entire AT1 market."

This week Fitch also found that U.S. money market funds cut their exposure to European banks in favor of the Federal Reserve's Reverse Repo Program. This was largely driven by continued risk aversion and declining demand for dollar funding by European banks.

"Money fund allocations to the reverse repo program reached an all-time high of \\$352 billion at end-2014 after the Fed introduced a new tool to support the program's ability to maintain a floor under short-term interest rates," says Bill Warlick, Senior Director. "Prime and government money funds took advantage of the tool's slightly higher rate and longer term, giving them certainty of remaining invested when supply might be limited at year-end."

Other topics covered in this week's edition of Inside Credit include:

-Emerging market banks lead rating actions
-European corporate funding disintermediation stalling
-Falling commodity prices spur midstream M&A
-The ripple effects of volatile energy prices are marginal for U.S. CLOs
-Financials at two year low in European money funds
-Loss data offers clues for expected GSE risk-sharing deals
-Could weak used car prices impact auto ABS ratings?
-Execution risk the near-term concern for Puerto Rico
-Marginal decline in EMEA CMBS workouts not expected to continue
-CRH deal shows trade buyers outbidding financial sponsors

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