Fitch Affirms Standard Bank Corporate Money Market Fund at 'AAA/V1' (zaf)
Fitch Ratings-Paris/London-23 February 2010: Fitch Ratings has today affirmed the fund credit and fund volatility National Ratings of the Standard Bank Corporate Money Market Fund at 'AAA/V1 (zaf)'. The rating actions follow a review of Fitch's global bond fund rating criteria and the removal of 'V1+' from Fitch's rating scale. 'V1' is now the highest volatility rating that a fund can achieve.
For further information, please see the criteria report 'Global Bond Fund Rating Criteria', dated 10 February 2010 which is available at www.fitchratings.com.
The affirmation of the fund credit and the fund volatility ratings reflect its high standards for credit quality and the short term nature of portfolio investments, as well as conservative fund interest rate duration policy and modest liquidity risk relative to other funds in South Africa. A fund credit rating of 'AAA' indicates the highest underlying credit quality and a 'V1' rating the lowest market risk.
It is important to note that comparisons between different national fund rating scales or between an individual national and international scale are inappropriate. Fitch also highlights that while funds rated 'AAA/V1' are expected to offer good liquidity and limited risk on net asset value, they have different risk profiles compared to funds rated on Fitch's money market fund scale (denoted with the 'mmf' subscript).
The fund invests in fixed and floating rate money market instruments, including negotiable certificates of deposit and promissory notes (linked to Johannesburg Inter - Bank Rate and prime rate) issued by South African and foreign banks with local operations in South Africa and fixed deposits.
As per the fund's internal guidelines, all assets within the portfolio must mature in 12 months and have a minimum national ratings of 'F1 (zaf)' / 'A (zaf)' while the portfolio interest rate duration (WAMr) may never exceed 90 days. Since September 08, the WAMr has been managed to lower levels with an average of 50 days compared to approximately 70 days prior to September 2008. Similarly, the portfolio weighted average final maturity (measuring the spread risk) was reduced to an average of 150 days from 170 days. The fund also invests in securities issued by the fund sponsor's parent company, Standard Bank (rated AA- (zaf)) which represented 16% of portfolio assets as at end January 2010. Fitch regularly monitors this exposure and expects it to remain moderate and broadly in line with Standard Bank's short term issuance level.
The manager of the fund is Stanlib Asset Management Ltd (Stanlib), a wholly owned subsidiary of Liberty Group (IDR AA- (zaf)), part of the Standard Bank group. As at end-December 2009, Stanlib had R317bn of assets under management, of which around R88bn were in money market products. The fund is regulated by the South Africa's Financial Services Board (FSB) and Collective Investment Scheme Control Act (CISCA).
Applicable criteria, "Global Bond Fund Rating Criteria", dated 10 February 2010, are available on Fitch's website at www.fitchratings.com.
Contacts: Keranka Dimitrova, Paris, Tel: +33 1 44 29 92 80, Aymeric Poizot, CFA Tel: + 33 1 44 29 92 76.
Additional information is available at www.fitchratings.com.
Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email: francoise.alos@fitchratings.com; Hannah Warrington, London, Tel: +44 (0) 207 417 6298, Email: hannah.warrington@fitchratings.com.
Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(zaf)' for National ratings in South Africa. Specific letter grades are not therefore internationally comparable.
National Fund Volatility ratings are an opinion of the relative sensitivity of the total return, including market price, on a fund's shares to a broad array of assumed interest rates, rate of mortgage prepayment, liquidity of the portfolio, spreads, currency exchange rates, and other market conditions.Additional information is available at www.fitchratings.com.
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