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The world's best short-term debt house

Awards for Excellence 2002

Goldman Sachs

In the past 12 months the world's largest short-term debt market, the US commercial paper market, has shrunk considerably as the credit ratings of many corporate issuers fell. Most US money market funds are bound by strict investment guidelines that limit the amount they can invest in lower-rated names.

Goldman Sachs, the leading dealer in the US market - closely pursued by Lehman Brothers and Merrill Lynch - responded to this in several ways. First, it kept issuers closely informed of the messages its salesforce was receiving from investors, advising companies to seek other sources of liquidity, including turning to back-up credit bank credit lines whenever they came close to straining the capacity of CP investors. From time to time, the firm might position commercial paper on its books that it believed it would be able to distribute later. And the firm worked on alternative sources of liquidity for clients facing difficulties, notably in the asset backed, Euro-commercial paper and MTN markets.

AT&T provides one example. Once a AA-rated A1/P1 issuer with $20 billion of US commercial paper outstanding, the US telecom company underwent a corporate restructuring, including the spin-off of Lucent, that inevitably cut its credit ratings to the point where it could not possibly sustain $20 billion in outstandings.

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