Crane Data Subscribers
S&P Withdraws BlackRock Cash Strategies LLC Rating, Clarifies Situation. On Monday, we wrote "More Enhanced Cash Woes: BlackRock Cash Strategies Gets Downgraded," which cited Moody's downgrade due to restrictions on redemptions. Yesterday, S&P withdrew its AAAf/S1+ rating (not posted yet) at the request of BlackRock (the fund hadn't been downgraded at the time of the withdrawal). The ratings agency notes, "While the fund seeks to maintain $1.00 per share, this is not a rule 2a-7 money market fund under the '1940 Act' and there is no assurance that a constant net asset value (NAV) per share will be maintained." S&P continues, "With market events having reduced the liquidity of certain securities in the portfolio, coupled with large redemptions in the fund [assets fell from $2.4 Sept. 30 to $1.2 billion], BlackRock implemented a Capital Support Agreement (CSA), with a LOC from Wachovia Bank, to help protect the NAV of those shareholders who remain in the fund for losses up to $70 million on certain less-liquid securities. The current NAV of the fund with the CSA in place is $1.00 per share. Should shareholders opt to redeem now, they will not be protected by the CSA and will receive redemptions in-kind.... Currently, without the CSA, the fund's NAV has deteriorated less than 1%."
