Fitch Rates AllianceBernstein Government Reserves Money Market Fund 'AAAmmf'
NEW YORK -- April 18, 2013
Fitch Ratings has assigned an 'AAAmmf' rating to the AllianceBernstein
Government Reserves Money Market Fund, a government money market fund managed
by AllianceBernstein. The fund will commence trading on May 1, 2013.
The rating assignment reflects Fitch's review of the fund's investment and
credit guidelines and AllianceBernstein's capabilities as investment advisor.
Following initial funding on May 1, 2013, Fitch believes the fund will have
extremely strong capacity to achieve its investment objectives of preserving
capital and providing shareholder liquidity through limiting credit, market
and liquidity risks.
KEY RATING DRIVERS
--The fund's investment guidelines mandating overall credit quality,
diversification and maturity profile;
--Minimal exposure to interest rate and spread risk;
--The capabilities and resources of AllianceBernstein as investment advisor.
CREDIT QUALITY AND DIVERSIFICATION
The fund will seek to maximize current income consistent with the safety of
principal and liquidity by investing at least 80% and normally substantially
all of its net assets in marketable obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities (which may bear adjustable
rates of interest). Additionally the fund may invest in repurchase agreements
related to U.S. Government securities.
Under normal market conditions, the fund invests in securities rated at least
'A-' or 'F1' by Fitch or equivalent or enters into repurchase agreements with
counterparties rated at least 'F1' or equivalent. Similarly, under normal
market conditions, the fund limits exposure of all credits in the portfolio to
5% of its assets - this applies to direct issuers and repurchase agreement
counterparties. All repurchase agreements purchased are overcollateralized by
102% with U.S. Treasury or government agency securities.
These investment policies are consistent with Fitch's 'AAAmmf' rating
The fund will manage its market risk exposure by limiting its weighted average
maturity (WAM) and weighted average life (WAL) to 60 and 120 days,
respectively, in accordance with guidelines.
To limit liquidity risk, the fund will seek to invest at least 10% of its
assets in daily liquid securities and at least 30% of its assets in weekly
liquid securities, in line with guidelines.
On May 1, 2013 the fund will commence trading operations and will be funded
initially from various internal AllianceBernstein municipal clients. Other
inflows are expected from other internal AllianceBernstein clients as well as
external investors, which should serve to diversify the shareholder base over
time. While Fitch anticipates the shareholder base could be somewhat
concentrated relative to available overnight liquidity in the beginning of the
funds' life. This concentration risk is expected to be short and substantially
mitigated by several factors including: the capabilities, resources and risk
management oversight of AllianceBernstein and the fact that the shareholders
are internal clients, resulting in high levels of communication with
AllianceBernstein, L.P., rated 'A+/F1' with a Stable Outlook, is a global,
diversified asset manager (USD443 billion assets under management as of March
31, 2013), approximately 63% owned by AXA S.A. (rated 'A/F1', Outlook Stable).
Money market assets under management were $6.6 billion as of March 31, 2013.
RATING SENSITIVITY AND SURVEILLANCE
The rating may be sensitive to material changes in the credit quality, market
or liquidity risk profiles of the fund. A material adverse deviation from
Fitch guidelines for any key rating driver could cause the rating to be
lowered by Fitch, specifically in this case greater than anticipated
shareholder concentration over a lengthy period of time as a result of less
than expected fund inflows. Given the portfolio's primary investment focus on
government securities, the ratings may also be sensitive to material adverse
changes in the U.S. government.
Fitch expects to receive weekly portfolio holdings information from the fund's
administrator to conduct surveillance against ratings guidelines and maintain
its money market fund rating.
Surveillance and analytical information on this fund is expected to be
available in the Funds Surveillance section of Fitch's web site
('www.fitchratings.com') in the near future.
Additional information is available at 'www.fitchratings.com'.
The sources of information used to assess this rating were the public domain
Applicable Criteria and Related Research:
--'Global Money Market Fund Rating Criteria', March 26, 2013.
Applicable Criteria and Related Research
Global Money Market Fund Rating Criteria
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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
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METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
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PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.
Gwen Fink-Stone, J.D.
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Yuriy Layvand, CFA
Brian Bertsch, +1-212-908-0549 (New York)
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