Fitch Assigns First-Time Rating to Federated Prime Private Liquidity Fund
September 22 2016 - 4:53PM
Business Wire
Fitch Ratings has assigned an 'AAAmmf' rating to the Federated
Prime Private Liquidity Fund, a separately designated series of
Federated Private Liquidity Funds, a Delaware statutory trust,
managed by Federated Investment Counseling (Federated). The fund
commenced operations on September 22 and Fitch's analysis was
conducted based on the fund's expected portfolio composition and
Federated's experience in managing funds with similar
strategies
KEY RATING DRIVERS
The 'AAAmmf' rating assignment reflects:
--The fund's expected overall credit quality and
diversification;
--Expected low exposure to interest rate and spread risks;
--Expected holdings of daily and weekly liquid assets consistent
with shareholder profile and concentration;
--The capabilities and resources of Federated.
The Fund is intended to serve as a cash management vehicle for
qualified eligible investors. The trust and the fund are exempt
from registration as an investment company pursuant to Section
3(c)(7) of the Investment Act of 1940, as amended.
The fund will not reserve the right to impose a liquidity fee or
to suspend redemptions temporarily in accordance with Rule
2a-7(c)(2). The fund seeks to maintain a stable net asset value
(NAV) of $1.00 per share by valuing its assets at their amortized
cost.
PORTFOLIO CREDIT QUALITY/DIVERSIFICATION
The fund seeks to maintain a diversified, high credit quality
portfolio consistent with Fitch's criteria for 'AAAmmf' rated money
market funds (MMFs), by investing in highly rated securities with
limited exposure to individual issuers.
MATURITY PROFILE
The fund seeks to limit interest rate and spread risk by
maintaining a weighted average maturity (WAM) below 60 days and a
weighted average life (WAL) below 120 days.
LIQUIDITY PROFILE
The fund seeks to maintain sufficient levels of daily and weekly
liquidity to meet investors' flows. At a minimum, the fund seeks to
maintain 10% of its portfolio in daily liquid assets and 30% in
weekly liquid assets.
While the fund will not be subject to the liquidity fees and
redemption gates provisions of Rule 2a7, the fund has the right to
delay redemptions under certain circumstances, including if the
fund is liquidating or to protect shareholder interests, as
outlined in the fund's private placement memorandum.
FUND OBJECTIVE
The fund seeks to provide current income in line with prevailing
money market rates, while aiming to preserve capital consistent
with these rates and to maintain a high degree of liquidity.
INVESTMENT ADVISOR
The fund's investment adviser is Federated Investment
Counseling, a subsidiary of Federated Investors, Inc. As of Sept.
30, 2015, Federated Investors, Inc had approximately $351 billion
in total assets under management. Fitch views Federated Investors,
Inc's investment advisory capabilities, financial and resource
commitments, operational controls, corporate governance and
compliance procedures as consistent with the 'AAAmmf' rating
assigned to the funds.
The fund does not have an independent board of directors that
provides oversight. However, the fund has an advisory board of
Federated employees that performs certain functions of a Rule 2a7
registered MMF's board of directors, including receiving periodic
reporting on the fund's operations and reviewing conflicts of
interest. Federated, as a registered investment advisor and trustee
of the fund, has a fiduciary responsibility to act in the fund's
best interests.
RATING SENSITIVITES
The rating may be sensitive to material changes in the credit
quality, market risk, and/or liquidity profiles of the fund.
Temporary deviations from metrics outlined in Fitch's criteria need
not automatically result in a rating change, provided the fund
manager is able to address them with credible near-term remedial
actions. However, material adverse and continued deviations from
Fitch's guidelines for any key rating driver may lead to the rating
being placed on Rating Watch Negative or downgraded.
SURVEILLANCE
Fitch will receive fund holdings information and other pertinent
fund data from the fund's administrator - Federated Administrative
Services - to conduct surveillance against ratings guidelines and
to maintain the MMF rating.
Additional information is available on www.fitchratings.com
Applicable Criteria
Global Money Market Fund Rating Criteria (pub. 10 Dec 2015)
https://www.fitchratings.com/site/re/874565
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1012083
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1012083
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY
FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION,
RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM
THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY,
CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER
RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE
OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD
PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD
ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE
ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
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Fitch RatingsPrimary AnalystGreg FayvilevichSenior Director+1
212 908 9151Fitch Ratings, Inc.33 Whitehall StreetNew York, NY
10004orSecondary AnalystAlexandra KellyAnalyst+1 646 582
4814orCommittee ChairpersonDavie RodriguezSenior Director+1 212 908
0386orMedia RelationsHannah James, + 1
646-582-4947hannah.james@fitchratings.com