Fitch puts 3 PRCM liquidity funds on rating watch negative
Fitch Ratings yesterday placed Prime Rate Capital Management’s (PRCM) euro, sterling and dollar denominated Liquidity Funds on Rating Watch Negative (RWN).
While the funds themselves appeared to give Fitch no cause for concern it was PRCM’s ultimate parent company, the Matrix Group Limited, that has fallen short of a revised set of criteria for a fund’s sponsor.
In Fitch’s opinion: “the sponsor’s financial resources are no longer consistent with a ‘AAAmmf’ rating,
even after taking into consideration the funds’ conservative investment guidelines.
“Therefore, Fitch has placed these funds on RWN pending a fuller review. The RWN does not reflect any negative development in the funds’ investment portfolios, which continue to be conservatively managed and fully meet the ‘AAAmmf’ portfolio guidelines set forth in Fitch’s rating criteria for money market funds.”
In a statement to Room 151, PRCM’s Chief Investment Officer, Dennis Gepp said: “Since Fitch’s last rating review of Prime Rate’s funds in December 2010 the agency has changed the way in which it applies certain of its criteria. For Fitch’s purposes, it is not sufficient that funds are managed on a conservative basis. It also requires the ‘sponsor’ to typically be (or deemed to be) solidly investment grade and to have the “inferred” ability to support a fund in extreme cases.
“Matrix Group Limited, the ultimate parent company of Prime Rate is a boutique, privately owned financial group that has never sought or purported to have investment grade status during its 24 year history. All of Prime Rate’s liquidity funds continue to be confirmed AAAm by Standard & Poor’s and their newly launched a Sterling Cash Plus Fund has been awarded a AAAf s1+ rating.
“Prime Rate is working closely with Matrix to provide Fitch with the required additional
comfort.”