(The following statement was released by the rating agency)
Dec 19 - Standard & Poor’s Ratings Services said today that it has affirmed its ‘AAAm’ principal stability fund rating on Dexia Money Market Euro AAA (the fund). The affirmation follows the signing of a sale and purchase agreement by GCS Capital to acquire Dexia Asset Management, the fund’s advisor. Finalization of this transaction remains subject to the approval of the regulatory authorities and the European Commission.
GCS Capital is a Hong-Kong-based strategic investor that has establishments in London and Beijing. It is supported by large institutional investors from Greater China and Qatar that have significant financial and strategic resources.
In our opinion, the ownership change of Dexia Asset Management will seek to improve operating efficiencies and market distribution capabilities. GCS Capital has recently signed a strategic partnership agreement with China’s largest bank, Industrial and Commercial Bank of China (ICBC), which would grant Dexia Asset Management access to a distribution network in Greater China.
We understand from Dexia Asset Management that a finalized deal would not likely affect the rated fund’s current distribution platform, the personnel managing the fund, nor the ability of Dexia Asset Management to meet the fund’s investment objectives. We will continue to review pertinent fund information and portfolio reports that are supplied to us on a weekly basis, as part of our surveillance process.
On Dec. 13, 2012, Dexia SA announced that it has signed a Sale & Purchase Agreement with GCS Capital regarding the disposal of Dexia Asset Management for EUR380 million. The sale falls within the context of the plan for the orderly resolution of the Dexia Group undertaken in October 2011. According to the public statement, GCS Capital is expected to work alongside the management of Dexia Asset Management to ensure a seamless transition and the strategy going forward will be to focus on Europe as Dexia Asset Management’s main center of excellence. Completion of the transaction could take place in the first quarter of 2013.
Principal stability fund ratings, or money market fund ratings, are identified by the ‘m’ suffix (e.g., ‘AAAm’) to distinguish the principal stability rating from a Standard & Poor’s traditional issue or issuer credit rating. A fund rated ‘AAAm’ demonstrates extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit risk. The rating is a forward-looking opinion about a fixed income fund’s capacity to maintain stable principal (net asset value). When assigning a principal stability rating to a fund, Standard & Poor’s analysis focuses primarily on the creditworthiness of the fund’s investments and counterparties, and also its investments’ maturity structure and management’s ability and policies to maintain the fund’s stable net asset value. Principal stability fund ratings are assigned to funds that seek to maintain a stable or an accumulating net asset value.
-- Methodology: Principal Stability Fund Ratings, June 8, 2011
-- Standard & Poor’s Ratings Definitions, June 22, 2012