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TEXT-Fitch affirms 3 Federated Prime Rate liquidity funds at 'AAAmmf'
December 17, 2012 / 4:35 PM / 5 years ago

TEXT-Fitch affirms 3 Federated Prime Rate liquidity funds at 'AAAmmf'

Dec 17 - Fitch Ratings has affirmed three money market funds managed by
Federated Prime Rate Capital Management LLP (FPR) at 'AAAmmf', as follows:

-- Federated Prime Rate Euro Liquidity Fund
-- Federated Prime Rate Sterling Liquidity Fund
-- Federated Prime Rate US Dollar Liquidity Fund

KEY RATING DRIVERS
The main drivers of the affirmation are:
-- The portfolios' overall credit quality and diversification.
-- Minimal exposure to interest rate and spread risks.
-- Short maturity profile with high overnight and one-week liquidity, consistent
with funds' shareholders profile and concentration.
-- The capabilities and resources of Federated Prime Rate Capital Management LLP
as asset manager.

PORTFOLIO CREDIT QUALITY/DIVERSIFICATION
Consistent with Fitch's 'AAAmmf' money market fund rating criteria, the funds
seek to maintain a high credit quality by investing exclusively in short-term
securities rated at least 'F1' by Fitch or a comparable credit quality by other
global rating agencies. As of 3 December 2012, the three funds were 54%, 57% and
70%, respectively, invested in issuers rated 'F1+' or equivalent. Also in line
with Fitch's criteria, the funds limit their exposures to individual issuers and
counterparties.

The funds' Portfolio Credit Factor (PCF), which is a risk-weighted measure of
the funds' portfolio assets accounting for the credit quality and maturity
profile of the portfolio securities, has consistently been in line with Fitch's
'AAAmmf' rating criteria guideline of 1.50 or less over the last year.

MATURITY PROFILE
The funds seek to limit interest rate and spread risk consistent with Fitch's
ratings criteria for funds rated 'AAAmmf'. Each fund limits its weighted average
maturity to reset date (WAM) and weighted average life (WAL) to 60 days and 120
days, respectively. It also limits the maturity date of any single investment to
397 days or less. As of 3 December 2012 the funds' WALs were considerably lower
than the maximum levels prescribed in Fitch's rating criteria at 43 days in the
EUR and GBP fund and 42 days in the USD fund.

LIQUIDITY PROFILE
The funds seek to manage investor redemption risk through investment
restrictions that aim to maintain sufficient levels of daily and weekly
liquidity. In line with Fitch's rating criteria, the funds seek to maintain at
least 10% of their assets in securities maturing overnight or other qualifying
liquid assets such as government securities and at least 25% in securities
maturing within seven days or other qualified liquid assets. As of 3 December
2012, the funds had overnight liquidity of 40% in the GBP and USD fund and 35%
in the EUR fund.

FUND OBJECTIVES
The funds' objective is to maximise current income consistent with the
preservation of principal and liquidity by investing in a diversified portfolio
of high quality short-term debt and debt related instruments denominated in the
relevant fund's base currency. The primary objective is to maintain the net
asset value of the undertaking either constant at par (net of earnings) or at
the value of the investors' initial capital plus earnings.

INVESTMENT ADVISOR
FPR, the funds' investment manager, is a wholly-owned subsidiary of the
Federated Investors, Inc. (NR). Fitch views Federated's financial resources as
consistent with a 'AAAmmf' rating. Federated is a publicly owned investment
manager. It was established in 1955 and as of 30 September 2012 had USD364bn in
assets under management, including USD270bn in money market funds.

The funds are qualifying money market funds domiciled in the UK. They form part
of the Federated Prime Rate Cash Management Funds scheme, an investment company
with variable capital. The scheme is authorised by the FSA and classified as a
UCITS scheme. As of 3 December 2012 the funds had total assets of, respectively,
EUR73m, GBP2,740m and USD434m.

RATING SENSITIVITY AND SURVEILLANCE
The ratings may be sensitive to material changes in the credit quality or market
risk profiles of the funds. A material adverse deviation from Fitch's guidelines
for any key rating driver could cause Fitch to downgrade the ratings. For
additional information about Fitch's money market fund ratings guidelines,
please review the criteria referenced below.

To maintain the Money Market Fund ratings, Fitch seeks weekly fund and portfolio
holdings information from the funds' administrator and depository - The Bank of
New York Mellon (BoNYM, AA-/Stable/F1+) - and conducts surveillance checks
against its ratings guidelines.

Surveillance data for these funds is available at www.fitchratings.com/FAM >
"Surveillance".

Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

The sources of information used to assess this rating were the public domain,
FPR and BoNYM.

Applicable criteria, 'Global Money Market Fund Rating Criteria', dated 29 March
2012 are available at www.fitchratings.com.

Applicable Criteria and Related Research:
Global Money Market Fund Rating Criteria

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