Federated writes "S&P Downgrade Immaterial to Money Market Funds". The "Market Memo says, "Standard & Poor's downgrade of the long-term creditworthiness of the United States on Friday night took investors by surprise. For money market fund investors, the more important news was that S&P affirmed the short-term rating of the United States at A-1+, which is S&P's highest rating for short-term sovereign debt. Therefore, the downgrade of the United States' long-term debt has no material impact on Federated's money market funds. In fact, this morning, S&P affirmed that the money market funds to which it has assigned a rating are "unaffected" by the downgrade of the United States' long-term creditworthiness. U.S. Securities and Exchange Commission Rule 2a-7, which governs money market funds, does not require U.S. Treasury or government agency securities to have a long-term rating of AAA; rather, Rule 2a-7's focus is on short-term ratings. Similarly, the prospectuses of the Federated money market funds do not impose a long-term rating requirement with regard to U.S. Treasury or government agency securities. As a result, there is nothing that would force Federated's money market funds to sell U.S. Treasury or government agency securities, prohibit the funds from continuing to buy these securities, or prohibit the funds from accepting these securities as collateral for repurchase agreements."
