Prime Money Market, which was marked for liquidation on Wednesday was put on CreditWatch Negative by the S&P. The CreditWatch means that S&P is concerned that the fund could have broken the buck. Putnam said that the NAV of the fund was $1.00 per share as of Tuesday the day before it was marked for liquidation.
The S&P said that the watch will be resolved when it gets more information on the status of the Fund NAV at the time of its closure.
Laura McNamara, a spokeswoman for Putnam told the MFWire
that the trustees were ironing out the details of how the fund would be liquidated. She added that the redemption may be in-kind, cash or a combination of the two.
Company Press Release
NEW YORK Sept. 18, 2008--Standard & Poor's Ratings Services said today that it placed Putnam Prime Money Market Fund's (the Fund) 'AAAm' principal stability fund rating on CreditWatch Negative. The CreditWatch action is based on uncertainty surrounding the Fund's net asset value (NAV) per share at the time of the Fund's closing on Sept. 17, 2008.
A placement on CreditWatch with negative implications signifies that the ratings could be affirmed or lowered following the completion of Standard & Poor's review of current developments stemming from the recent announcement by Putnam Investments, the fund's manager, that the Board of Trustees of the Putnam Funds voted to close the institutional Putnam Prime Money Market Fund effective as of 5:00 p.m. on Sept. 17, 2008.
The CreditWatch/Negative will be resolved when additional information is provided to us on the status of the Fund's NAV at the time of the Fund's closure. Likely outcomes will be either a rating affirmation of the 'AAAm' principal stability rating followed by the withdrawal of the Fund's rating due to its closing or a lowering of the rating if the NAV falls below $0.9975 per share. Should the Fund's NAV falls below $0.9950 per share, the rating would be downgraded to 'Dm'.
Standard & Poor's Principal Stability Fund Ratings (PSFRs), also called Money Market Fund Ratings, are generally assigned to SEC-registered (2a-7) money market funds, government investment pools, separate accounts, and other managed pools of fixed-income assets whose objective and investment policies are intended to provide a stable (that is, at least $1.00 per share) NAV. PSFRs range from 'AAAm' (extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit, market, and/or liquidity risks) to 'Dm' (failure to maintain principal stability resulting in a realized or unrealized loss of principal). The 'm' distinguishes the PSFR from our traditional debt ratings, which are usually not subscripted and that indicate our opinion of a borrower's ability to repay principal and interest on a timely basis. As part of our fund rating process, we review holdings and summary information of principal stability-rated funds weekly.
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