Moody's expects outcome of new banking methodology to be positive for money fund ratings; no change for bond fund ratings

Moody's Investors Service expects recent bank rating actions, together with the intended introduction of Counterparty Risk (CR) assessments for senior bank obligations and counterparty commitments, to drive improvements in credit and stability profiles of rated money market funds (MMFs). On Tuesday 17 March, a large number of bank ratings were placed on review following the publication of Moody's new bank rating methodology. 

Our preliminary analysis of how potential rating changes may affect MMF portfolios indicate, on average, likely improvement in funds' credit matrix and net asset value (NAV) stress scores, two key metrics in our evaluation of MMFs. Of the 201 rated MMFs, less than 7% are potentially negatively impacted by Moody's bank rating actions based on most recent monitoring reports.