S&P Global Ratings published a "Request For Comment: Principal Stability Fund Rating Methodology," which states, "S&P Global Ratings is requesting comments on proposed revisions to its principal stability fund rating (PSFR) criteria. A PSFR is our forward-looking opinion about a fixed-income fund's ability to maintain a stable net asset value (NAV). This methodology applies to funds - including master feeder structures -- that aim for stable or accumulating NAVs. The proposed criteria will supersede 'Principal Stability Fund Rating Methodology.' The current criteria remain in effect until we finalize these proposed criteria."
A section titled, "Key Changes" says, "Although the overall framework for determining a PSFR will remain unchanged, we're proposing changes to update certain parameters and introduce greater analytical flexibility to consider market conditions. We're also simplifying and increasing the transparency of the criteria."
They then list the major updates: "We are proposing changing the sovereign and sovereign government-related entity diversification limits and eliminating the differentiation across PSFR categories; We are introducing greater analytical flexibility to consider the market depth and liquidity of the sovereign; We are applying a maximum allowance for investing in other principal stability funds across PSFRs; and, We are updating the limits applicable to 'A-1+' rated securities to include 'A-1' rated investments that mature in one month or less, from five business days or less.
Their changes also include: "We are simplifying the criteria pertaining to high bank concentrations (HBCs) by eliminating the HBC minimum credit quality requirement, and relying instead on the limits that apply more generally. At the same time, we're proposing eliminating the HBC fund aggregate limits and adjusting the HBC diversification limits; We are adding appendixes that discuss our methodology for rating tokenized money market funds and money market exchange-traded funds."
S&P writes, "We expect no ratings impact if the proposals are adopted. S&P Global Ratings is seeking feedback on the proposed criteria by Oct. 19, 2026. We encourage interested external market participants to submit their written comments to https://disclosure.spglobal.com/ratings/en/regulatory/ratings-criteria. Comments may also be sent to CriteriaComments@spglobal.com should participants encounter technical difficulties."
The RFC continues, "The framework starts with our assessments of quantitative metrics -- regarding a fund's credit quality, diversification, liquidity, net asset value (NAV), and maturity -- which together set the preliminary PSFR. Then we factor in our assessment of a fund's management (its staff expertise, credit research, and internal controls) to determine the final PSFR.... To distinguish PSFRs from S&P Global Ratings' standard issue or issuer credit ratings, PSFRs have an 'm' suffix (e.g., 'AAAm'). The rating scale is calibrated to reflect the likelihood of a fund successfully maintaining its NAV stability."
It also says, "Our determination of a PSFR starts with a quantitative assessment of a fund's underlying portfolio. We evaluate critical risk drivers, such as credit quality, diversification, liquidity, NAV, and maturity. We cap the preliminary PSFR at the rating supported by the quantitative metrics in table 1. We employ a 'weak link' approach: To achieve a specific rating, a fund must satisfy all quantitative criteria for that preliminary rating, accounting for any applicable cure periods. The 'Dm' rating category is excluded from this process."
Within "Appendix B: Tokenized MMFs And Money Market ETFs," S&P states, "Tokenization of money market funds (MMFs) introduces additional operational, technological, and regulatory risks beyond those typically associated with traditional MMFs. The criteria distinguish between risks inherent to all MMFs (including credit, liquidity, and interest rate risks) and those arising specifically from the tokenization process. In addition to the qualitative and quantitative requirements applicable to all PSFRs, the analysis of tokenized MMFs encompasses the following key areas: Tokenization process and smart contract integrity; Issuance, redemption, and programmable compliance; Data integrity: NAV and oracle reliability; Wallet, custody, and system security; Secondary market liquidity; Governance and ongoing monitoring; and, Event-driven reviews."
Finally, they write, "The introduction of ETF share classes alongside traditional mutual fund classes introduces additional market-based and structural risks beyond those typically associated with standard MMFs. While the core credit, liquidity, and interest rate risks remain constant, the criteria for ETF share classes focus on the risks arising from the secondary market interface and the decoupling of market price from NAV. In addition to the qualitative and quantitative requirements applicable to all PSFRs, the analysis of ETF share classes encompasses the following key areas: ETF structural and operational integrity; NAV monitoring and valuation integrity; Market microstructure and price-to-NAV dynamics; Data integrity: NAV and market price feeds; Counterparty and ecosystem risk; Governance and ongoing monitoring; and, Event-driven reviews."
