Fitch has further analysed the results of a survey of European treasurers published in conjunction with Treasury Management International (TMI) on 26 February 2013 due to strong market interest, focusing on those respondents investing specifically in CNAV and differentiating by the respondent firms' total cash holdings.

Almost half (47%) of European treasurers investing in CNAV MMFs, irrespective of the amount of their cash holdings, view a regulatory shift to variable NAV (VNAV) MMFs as a potential concern as the funds' risk profile may become less clear. This compares with 26% for all respondents as presented in Fitch's February survey. This is consistent with the widely held view of European treasurers' that the main strength of CNAV funds is their clear risk profile (cited by 71% of CNAV users). 50% of CNAV investors also cite their simple tax and accounting treatment as a strength (vs. 31% for the total sample of treasurers), which might disappear in VNAV funds.

In their rationale for a move to VNAV, regulators have expressed the view that CNAV MMFs are perceived as being 'guaranteed', heightening the risk of a 'run.' Approximately 50% of European treasurers using CNAV MMFs cited the 'false perception of a guarantee' as, in fact, being a drawback of CNAV MMFs. This seems to highlight that treasurers understand that CNAV MMFs are managed products subject to potential losses.

Conversely, these same CNAV investors place great emphasis on the importance of the sponsor, including the potential for a fund bailout. In fact, 78% of CNAV investors, versus 50% of VNAV investors, cite ability to bail out a fund as one reason to consider the financial strength of the sponsor when selecting a MMF. Based on these results, we believe that treasurers investing in CNAV MMFs see the sponsor as an additional layer of potential support, rather than offering a guarantee.

Two-thirds of those treasurers in Europe with more than USD/EUR/GBP1bn of cash use MMFs, compared to half of the total sample. With larger cash balances, investors increasingly look to MMFs to provide active management of cash and diversification. Half of the largest treasurers in Fitch's sample use CNAV MMFs.

European treasurers with smaller cash holdings - those managing less than USD/EUR/GBP50m of cash -- and that use CNAV funds seem more uncertain about the impact of a regulatory move to VNAV, with 33% of them unclear as to the impact while treasurers with higher balances all had an opinion on the matter. Of all the treasurers surveyed by Fitch, only 11% were unsure as to the impact with 42% viewing it as significant or material and 47% as marginal or having no impact.

The initial results of the survey were published on 26 February 2013 in a special report which is available at www.fitchratings.com
68 European treasurers responded to the survey.
The bulk of the respondents were corporate treasurers (76%), local authorities (9%) and banks (6%).
Half of the respondents had more than USD/EUR/GBP250m of cash and a quarter of all respondents had more than USD/EUR/GBP1bn in cash.

European Treasurer Survey 2013