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From a number of perspectives it has
become arguably less likely that CRAs
will continue to play as significant
role for the money market industry as
they have done up to this point
In our view CRAs are important as an
information point to the investment
process for both asset managers and
clients but should be viewed as just
one component in a process that
should include dialogue and partnership between an asset manager
and a money fund market investor.
A confluence of factors have led to
a difficult investing environment as
cash investors seek to find balance
between their quest for stability,
liquidity and yield. In this article,
we explore what the impact has been
on Money Market Funds (MMF) and
options that may help cash investors
find relief in this challenging environment.
Current market and
background
The current economic climate has
caused investing in the short term
markets to be increasingly challen-
N°82
—
LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE
The 2007-2009 Credit Crisis brought about fundamental changes in the landscape
for money market funds. Not least of these is the role and
importance of CRAs.
Regulators responded to a pre-crisis perceived over
-reliance on CRAs in the securities industry and by
investors by proposing laws that would specifically
prohibit the reference to issuer ratings in legisltion.
In turn CRAs amended their credit matrices,
or the scoring process they used to gauge
the credit strength of issuers and
their various instruments
often resulting in a
downward shift in their credit
assessments of specific counterparties.
— juLy / Aug. / sept. 2013
Credit Rating Agencies (CRAs) and the
Changing Landscape of Money Market Funds
31
Table des matières de la publication Trésorier/Treasurer magazine - n°82 - July/Aug./Sept. 2013