Goldman injects $1 billion into own funds after heavy withdrawals
NEW YORK: Goldman Sachs Group Inc poured more than $1 billion into two of its prime money-market portfolios this week due to heavy investor withdrawals, in what the Wall Street bank described as a preemptive move to boost liquidity at a time of coronavirus-related stress.
Goldman purchased $722.4 million in assets from its GS Financial Square Money Market Fund and $301.2 million from its GS Fund Square Prime Obligations Fund, the bank disclosed on Friday in a US Securities and Exchange Commission filing.
Investors had withdrawn a net $8.1 billion from the two funds, putting downward pressure on their liquidity levels, the funds’ disclosed on their websites.
Goldman bought securities from the funds at market value as a proactive move and not from any stressed position, Patrick Scanlan, a Goldman spokesman, said on Saturday. The transactions occurred on Thursday.
“These actions underscore our commitment to the GSAM funds providing liquidity to clients focused on the near-term implications of the current market environment,” David Fishman, head of the liquidity solutions portfolio management team within Goldman Sachs Asset Management, said in an emailed statement.
SEC rules dictate that funds have to keep at least 30 per cent of their portfolios in securities that can be converted to cash in five business days so they can meet investor redemptions.
Goldman’s Financial Square Money Market Fund’s level of weekly liquidity had been 34 per cent before the purchases, and surged to 46 per cent by the end of Friday. Its Prime Obligation Fund’s weekly liquidity rose from 44 per cent to 55 per cent, Goldman said in an email.
Industry-wide, investors pulled tens of billions of dollars from prime money-market funds, which buy toprated corporate debt. Although they are among the tamest investment vehicles, they can be riskier than portfolios that rely more on US government bonds.