(The following statement was released by the rating agency)
Oct 05- Standard & Poor’s Ratings Services said today that it assigned its highest principal stability fund rating of ‘AAAm’ to HSBC Euro Government Liquidity Fund, a money market subfund of the Irish-domiciled umbrella fund, HSBC Global Liquidity Funds PLC.
The assigning of this rating coincides with the launch of the subfund today. The rating is based on Standard & Poor’s analysis of the subfund’s credit quality, liquidity, market price exposure, and management.
HSBC Global Asset Management (UK) Ltd., promoter of the HSBC Euro Government Liquidity Fund, has established this very conservative vehicle to further enhance its offshore money market fund range with a Euro-denominated government money market fund. According to its prospectus, the new subfund aims to provide investors, in particular institutional and professional clients, with security of capital and daily liquidity together with an investment return comparable to normal short-dated Euro denominated government returns. The assigned “AAAm” rating reflects our view of the subfund’s extremely strong capacity to maintain principal stability and limit exposure to principal losses due to credit risk.
The subfund is managed by an experienced team of investment professionals at Paris-based HSBC Global Asset Management (France). The investment team operates under conservative investment principles and strict internal controls to meet the subfund’s objectives. This team is also responsible for the management of two of HSBC Global Liquidity Funds PLC’s other money market subfunds: the HSBC Sterling Liquidity Fund and the HSBC Euro Liquidity Fund (which Standard & Poor’s rates ‘AAAm’).
The HSBC Euro Government Liquidity Fund will invest its assets in a diversified portfolio of highly-rated euro-denominated money market securities issued or guaranteed by EU governments, such as Euro treasury bills, certificates of deposits or commercial paper. It also use reverse repurchase agreements collateralized by highly-rated EU government debt. We understand that the subfund will maintain strong credit quality standards by investing all of its assets in securities, or with counterparties, that Standard & Poor’s rates at least ‘A-1’, or of equivalent credit quality. To enhance the portfolios’ liquidity and diminish sensitivity to changing interest rates, the subfund will maintain a weighted average maturity of 60 days or less. The subfund has several share classes, including accumulation and distribution shares. Standard & Poor’s will review pertinent subfund information and portfolio reports on a weekly basis as part of its surveillance process.
HSBC Global Liquidity Funds PLC is incorporated with limited liability as an open-ended umbrella investment company with variable capital and segregated liability between subfunds under Irish law. It is authorized by the Central Bank of Ireland as an Undertaking for Collective Investments in Transferable Securities (UCITS) under the European Community’s 2003 UCITS Regulations. The investment manager, HSBC Global Asset Management (France), is a wholly owned subsidiary of HSBC Holdings PLC (AA-/Stable/A-1+). The custodian and the administrator of HSBC Global Liquidity Funds PLC are BNY Mellon Trust Company (Ireland) Ltd. and BNY Mellon Fund Services (Ireland) Ltd., respectively. Both entities are indirect wholly-owned subsidiaries of the Bank of New York Mellon (AA/Stable/A-1+).
Standard & Poor’s principal stability fund ratings, identifiable by the ‘m’ suffix, are assigned to funds or pools that exhibit stable net asset values. Those funds rated ‘AAAm’ exhibit a superior ability to limit exposure to loss, and to maintain a constant or rising net asset value per share at all times, according to our criteria.
— Funds Rating Criteria: Principal Stability Fund Ratings Criteria For Offshore And European Money Market Funds, Feb. 2, 2007
— Request for Comment: Principal Stability Fund Rating Criteria, Jan. 5, 2010