Standard & Poor's on Friday placed 73 fixed-income funds on credit watch with negative implications because of their exposure to U.S. Treasury and U.S. government agency securities, a move taken over concern about U.S. sovereign credit quality, according to an S&P statement.
The affected funds include those managed by BlackRock Fund Advisors, State Street Global Advisors, Federated Investors, Franklin Advisers and Goldman Sachs Asset Management. They also include the City of Anaheim Treasurer Investment Pool, City of Los Angeles General Pool, Illinois Metropolitan Investment Fund, City of Houston General Investment Pool and the Florida Local Government Investment Trust.
The action on the funds reflects S&P's view that “there is a one-in-two chance that we would lower the ratings (on the funds) over the next 90 days by up to two notches, the statement said.
“Of the 206 funds managed in the U.S., Europe and Bermuda, we placed our ratings on 73 of them on CreditWatch negative because of the funds' significant exposures — generally greater than 50% — to the U.S. sovereign credit ratings,” the statement said. “These exposures are either through direct or indirect investments in U.S. Treasury and U.S. government agency securities. Based on these exposures, we could lower the ratings by up to two notches, as determined by our fund credit quality matrix approach.”
The moves follow Standard & Poor's placement July 14 of its AAA long-term and A-1+ short-term ratings on the United States of America on credit watch negative, the statement said.
Jessica Greaney, BlackRock spokeswoman; Arlene Roberts, SSgA spokeswoman; and Ed Costello, Franklin spokesman, couldn't be reached for comment. Ed Canaday, Goldman Sachs spokesman, declined to comment.
