A unit within Mark Walter’s business empire that plays a significant role in short-term funding markets is experiencing shrinking investor interest amid a federal investigation into the billionaire sports-team owner. Guggenheim Treasury Services, which facilitates commercial-paper transactions between investors seeking secure cash placements and banks requiring short-term capital, has seen a notable decline in outstanding paper volume in recent months.
According to data from the Depository Trust & Clearing Corp., the division’s managed commercial paper totaled approximately $45.8 billion at the end of September, down about 14% from $53.1 billion at the close of June. This decline extended into mid-October. In contrast, competitors largely maintained stable levels, with Nearwater Capital—the largest player in the sector—recording only a slight decrease of about 1% to $86.1 billion over the same period.
Guggenheim Treasury Services structures transactions that sell commercial paper to money-market funds and other investors. The funds raised finance the trading activities of global investment banks, a market segment that has expanded considerably in recent years. While investors are theoretically insulated from direct exposure to Guggenheim itself, market participants report that concerns arising from the ongoing investigation have led some investors to scale back their involvement with the Guggenheim operation.
JPMorgan’s issuer-level data indicates a roughly 12% drop in Guggenheim’s volume during the third quarter. A spokesman for Guggenheim Treasury Services emphasized that the business remains robust and attributed the fluctuations to broader interest rate movements that have affected multiple market players. “Fluctuations in a markets-driven business are normal and reflect a wide range of factors,” the representative said.
The Treasury Services division originated from Liberty Hampshire, a business Walter founded in the 1990s to pioneer issuing commercial paper used by banks for lending purposes without the entity itself being a bank. It functions independently from other Guggenheim Partners units and Walter’s insurance companies.
The U.S. Justice Department is conducting an inquiry into whether Walter’s insurance firms improperly financed other segments of his business group without appropriate disclosure. Additionally, authorities are investigating allegations raised by whistleblowers that Guggenheim’s asset-management arm may have artificially inflated revenue figures. Walter and his holding company, TWG Global, have denied any wrongdoing. The investigation became publicly known in July, and in August, Guggenheim Treasury Services reassured its clients that it was not implicated, clarifying that repayment of commercial paper does not depend on the performance of Guggenheim Treasury Services or Guggenheim Partners broadly.
The asset-backed commercial paper market, which nearly collapsed during the 2008 financial crisis and stagnated for years, has experienced renewed growth since the COVID-19 pandemic, though it remains below precrisis peak levels, according to Federal Reserve data. Fees for the transactions vary and are closely guarded but are reported to range from a few basis points for straightforward deals to around 25 basis points for more complex arrangements.
The nature of the financed activities has shifted over time. Whereas precrisis commercial paper often supported auto loans and mortgages, today these structures more commonly back securities trades for hedge-fund clients. Banks utilize these financing vehicles to enhance capital and liquidity metrics, which are closely monitored by regulators and investors.
Demand from investors remains strong, driven in part by rising interest rates that have improved returns on short-term instruments, noted Ian Rasmussen, a senior analyst at Fitch Ratings. The commercial paper issued through Guggenheim and its peers typically matures within a year or less, maintaining liquidity for investors while supporting ongoing bank operations.