TEXT-S&P changes Georgia Fund 1 rating to 'AAAf/S1+'

Tue Dec 18, 2012 12:32pm EST

Dec 18 - Standard & Poor's Ratings Services today said it changed its
ratings on Georgia Fund 1 to a 'AAAf' fund credit quality rating and a 'S1+'
fund volatility rating from a 'AAAm' principal stability fund rating. We made
the change at the request of Georgia's Office of the State Treasurer so the fund
has the flexibility to manage to less restrictive criteria given the sustained
period of extremely low interest rates. 

The 'AAAf' rating reflects that Georgia Fund 1's portfolio provides extremely 
strong protection against losses from credit defaults. The 'S1+' volatility 
rating signifies that the pool possesses extremely low sensitivity to changing 
market conditions and an aggregate level of risk that is less than or equal to 
that of a portfolio comprising the highest-quality fixed-income instruments 
with an average maturity of 12 months or less.

Georgia Fund 1 began operating in July 1981 and conforms to all statutes 
governing the investment of public funds. The fund's primary investment 
objectives are safety of capital, liquidity, yield, and diversification, with 
a primary emphasis on safety of capital and liquidity. Georgia Fund 1, which 
we had rated 'AAAm' since June 19, 1995, is offered by the State of Georgia to 
counties, municipalities, public colleges and universities, boards of 
education, special districts, state agencies, and other authorized entities as 
a conservative, efficient, and liquid investment alternative. 

Since its inception, Georgia Fund 1 has commingled local government funds with 
state general fund investments to provide greater economies of scale in 
investing funds as well as to minimize the fluctuations in investment 
portfolio balances. The state operating monies invested in the pool provide 
additional stability to the fund because the state highly controls the 
disbursement of these monies.

The Office of the State Treasurer (OST) assumes the daily responsibility of 
managing the assets of the pool. The State Depository Board prescribes the 
investment policy and cash management policies and procedures for the state 
and provides oversight for the pool. The board meets quarterly and consists of 
the governor, the commissioner of insurance, the state accounting officer, the 
commissioner of transportation, the commissioner of banking and finance, the 
state revenue commissioner, and the state treasurer. State law requires the 
board to formulate such policies to maximize efficient and effective 
utilization of the state's cash resources. We also rate one other pool managed 
by Georgia's Office of State Treasurer. The Georgia Extended Asset Pool, rated 
since Nov. 9, 2000, is currently rated 'AA+f/S1'.

The OST generally invests Georgia Fund 1 assets in U.S. Treasury obligations, 
securities issued or guaranteed by the U.S. government or any of its agencies 
or instrumentalities, banker's acceptances, repurchase agreements contracted 
with highly rated counterparties, negotiated investment deposit agreements, 
and highly rated commercial paper. 


RELATED CRITERIA AND RESEARCH
     -- Methodology: Updated Fund Credit Quality Ratings Criteria For 
Counterparty Transactions, July 22, 2011
     -- Methodology: Principal Stability Fund Ratings, June 8, 2011
     -- Fund Credit Quality Rating Criteria, Feb. 2, 2007
     -- Fund Volatility Rating Criteria, Feb. 2, 2007
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