Nairobi, July 15 -- Dollar-denominated money market funds (MMFs) are putting investors' cash into African and global Eurobonds through special debt securities structured by multinational banks, sidestepping regulatory restrictions in search of higher returns amid intensifying competition for clients.

MMFs are, by law, limited to investing in highly liquid short-term debt instruments-with an average maturity of 18 months-such as bank deposits, Treasury bills and commercial paper. This bars them from investing directly in long-term local and foreign bonds, which often pay higher interest rates.

Multinational banks such as Standard Chartered Bank, Stanbic Bank and Absa Bank have, however, structured short-term credit-linked notes derived f...