State Street Corp.'s stock price declined Tuesday after a British newspaper reported it has significant exposure to asset-backed commercial paper conduits, which have caused problems for European banks.
The Boston company had $27.9 billion in credit lines to four asset-backed commercial paper funds as of June 30, according to a filing with the Securities and Exchange Commission.
According to the Times of London the funds issue short-term paper and then reinvest the proceeds in high-yield, longer-term debt, including residential mortgage-backed securities. In a story published Tuesday, the paper said they account for 17% of State Street's assets, the highest exposure to the sector of any European or American bank.
Carolyn Cichon, a spokeswoman for State Street, said the assets have good credit quality and have received primarily AAA and AA credit ratings. "The commercial paper continues to be sold daily and we continue to actively monitor market developments," she said. State Street's shares fell 4.18% Tuesday, to $61.21.
