Standard & Poor's on Monday lowered the credit quality ratings for 73 fixed-income funds because of their significant exposures — generally greater than 50% — to Treasury and U.S. government agency securities in direct or indirect investments.
S&P took the action following its downgrading of the United States to AA+.
The downgraded funds include mutual funds and state and local pooled funds.
The fund ratings were lowered by as many as two notches, depending on their exposures. In all, 70 of the 73 funds whose ratings were lowered were previously rated AAAf, meaning they had the best quality rating with “extremely strong protection against losses from credit defaults,” the statement said.
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 and City of HoustoFederated Investorsdvisors, 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 and City of Houston General Investment Pool.
S&P had put the 73 funds on credit watch with negative implications July 13. In the action Monday, S&P removed the funds from the credit watch negative.