"Moody's Revises Its Approach To Counterparty Rating Actions In Repo ABCP Conduits," which says, "Moody's Investors Service said today in a new Rating Methodology Supplement that it is revising its practice in respect of the ratings of repo asset-backed commercial paper (ABCP) conduits when one or more of the conduit's counterparties is subject to a rating action." "Repo ABCP conduits are usually sponsored by firms that are not associated with a commercial bank or other large financial institution and which fund transactions from Prime-1 rated firms on a fully-supported basis," says Wolfgang Krauss, a Moody's Analyst and co-author of the report. "Due to the distinct structure of repo conduits, there is direct linkage between the Prime-1 rating of the repo conduit and that of the counterparties under the repurchase (or similar) transactions into which the conduit has entered. Accordingly, any rating action affecting any of these counterparties will have direct implications for the conduit's rating, irrespective of the size of the exposure, since the rating of the conduit is primarily based on a pass-through of the counterparty rating(s)." See also, WSJ's "SEC Plans Two-Part Money-Market Reform" and "EU wants single money market fund definition".
