The money markets are going to remain tight with a very low yield until the end of the year - that is according to Alistair Border, vice-president and head of fixed income at Butterfield Asset Management.

Mr. Border was on a panel comprising Faith Outerbridge, chief investment officer of Liquidity Americas at the Bank of Bermuda, debating 'Investing - a Challenge in a Credit Crisis' at the Bermuda Captive Conference held at The Fairmont Southampton last Wednesday.

They were joined by Russell Busst, director of Credit Agricole Asset Management (UK) Ltd. and head of UK Institutional Fixed Income, Walter Lenhard, a senior investment strategist from Vanguard, Todd Youngberg, senior vice-president and head of high yield at Aviva Investors, Shawn Murphy, president and chief investment officer of PRP Performa and Joseph Finn, managing director of P-Solve Asset Solutions, and moderator Kate Robinson, senior vice-president at Aon Insurance Managers (Bermuda) Ltd.

The panellists looked at what investors and managers had done with their portfolios and the action they planned to take in the future, focusing on credit and liquidity issues.

Mr. Border kicked-off the discussion by saying that Butterfield Asset Management was ready for the credit crunch which started in August 2007 and spilt over into the collapse of Lehman Brothers a year later, carrying out credit analyses and reviewing credits in its portfolios.

"There was a good flow of credit to and from investors and issuers through that time," he said.

"But we were prepared - we battened down the hatches before Lehman came."

He said his company's reaction during this period was to raise liquidity and talk with its clients about what was happening.

"A lot of people were running scared, but we were fortunate that we had a very stable client base," he said.

"There were opportunities and we were fortunate enough to take advantage of those opportunities."

But Mr. Border reckons there will not be much movement in the credit market for the rest of 2009.

"It is going to stay very low yield I think for the rest of the year," he said.

"It is going to be a very tight situation in the money markets until the end of the year."

Ms Outerbridge then gave a presentation on how the Bank of Bermuda's clients have reacted to the credit squeeze and global trends for the money markets.

In terms of businesses holding short-term assets in money funds, she said multi-national corporations were becoming increasingly cash rich, with Standard & Poor's 500 companies holding some $650 billion in cash, equivalent to 11 percent of their market capitalisation.

Meanwhile, Ms Outerbridge revealed that worldwide demand for liquidity funds had almost reached $5 trillion in 2008 and continued to climb towards that figure by April 2009, while pointing out that US money market mutual fund assets since January 2008 had managed to weather the financial storm at a steady level, pushing $3.8 trillion by this month.