Fidelity sells off short-term U.S. government debt

Fidelity said Wednesday that it no longer holds any U.S. government debt that comes due around the time the nation could hit its borrowing limit.
By KEN SWEET Published: October 10, 2013
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The nation's largest manager of money market mutual funds said Wednesday that it no longer holds any U.S. government debt that comes due around the time the nation could hit its borrowing limit.

Money market portfolio managers at Fidelity Investments have been selling off their government debt holdings over the last couple of weeks, said Nancy Prior, president of Fidelity's Money Market Group. While Fidelity expects the debt ceiling issue to be resolved, the Boston-based asset manager said it is taking steps to protect investors.

Prior said that Fidelity no longer holds any U.S. debt that comes due in late October or early November, the window considered by many investors to be the most exposed if the government runs out of money and defaults on its obligations.

“We expect Congress will take the steps necessary to avoid default, but in our position as money market managers we have to take precautionary measures,” Prior said.

Fidelity, which manages $430 billion in money market mutual funds, has taken similar actions in the past. The most recent instance was in the summer of 2011, when the U.S. government came close to a default and Standard & Poor's downgraded the nation's credit rating, Prior said.

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