Standard & Poor's Reviews Fund Ratings Criteria
A press release from S&P says, "Standard & Poor's Ratings Services is in the process of reviewing its criteria for rating fixed-income funds, primarily money market funds, whose principal stability is the focus of its analysis, according to [its] "Advance Notice Of Proposed Criteria Change: Principal Stability Fund Ratings." It explains, "In our review, we will primarily focus on criteria we apply to ratings on such funds in Australia and New Zealand.... As part of this effort, we plan to publish a request for comment outlining our proposed criteria for rating funds in Australia and New Zealand, as well as our proposed and related changes to the criteria we apply globally. This follows the release of our updated rating criteria for global principal stability fund ratings on June 8, 2011. Before publishing our final criteria, we will consider all market feedback received as part of this process. We have three objectives for our proposed criteria: to enhance the transparency of our criteria and the rating process; to help market participants better understand our approach to assigning ratings on funds seeking to maintain principal stability; and to support continued, improved global consistency in our approach to principal stability fund ratings." It continues, "Under the proposed criteria, we plan to retire the regionally specific criteria applied to the ratings on funds in Australia and New Zealand and instead apply the global criteria. This would result in applying our global criteria to assessments of management, credit quality, investment maturity, liquidity, portfolio diversification, index and spread risk, and security-specific risks for those funds in Australia and New Zealand. More specifically, the proposal would include changes from the criteria we used to rate those funds so they will be in line with our global criteria. In conjunction with the review of the criteria we apply to principal stability funds in Australia and New Zealand, our proposal to update the global criteria includes changes to certain diversification thresholds for lower rated funds, among other changes."
