Fitch Updates Closed-End Fund Rating Criteria

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has updated its criteria for rating obligations of closed-end funds (CEFs) and market value structures (MVS). The framework of the criteria remains the same, and Fitch does not expect any existing ratings to be impacted by the changes.

The new report adds clarification and detail, particularly with regard to the criteria's application for rating obligations of CEFs operating outside the framework of the U.S.'s Investment Company Act of 1940 (1940 Act) and includes Fitch's analytical framework for rating obligations backed by private equity collateralized fund obligations (PE CFOs).

Fitch's CEF and MVS criteria primarily rely on analysis of historical stressed performance of market values in combination with structural protections. For CEFs operating outside the 1940 Act and MVS that do not benefit from the same market-value-based structural protections found in 1940 Act CEFs, Fitch's criteria include supplemental cash flow analysis as is relevant for the asset class.

Specifically, in the case of PE CFOs, we added detail to our criteria for rating obligations backed by a portfolio of private equity L.P. interests. The analysis focuses on a review of historical performance of portfolios with similar characteristics, considering performance through adverse market cycles and applying stress scenarios. Fitch's criteria also include minimum portfolio diversification and factors in structural protections such as reserve accounts and market-value-based triggers, and the capabilities of the manager and sponsor.

In addition to the changes above, Fitch also updated the criteria to apply ratings modifiers to CEFs and MVs when applicable.

See 'Rating Closed-End Funds and Market Value Structures,' dated May 11, 2016, available by clicking on the link.

Additional information is available at www.fitchratings.com

Rating Closed-End Funds and Market Value Structures

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=881003

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND 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 THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160511006581/en/

Fitch Ratings
Greg Fayvilevich, +1-212-908-9151
Senior Director
Fund and Asset Management
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Brian Knudsen, +1-646-582-4904
Associate Director
Fund and Asset Management
or
Roger Merritt, +1-212-908-0636
Managing Director
Fund and Asset Management
or
Media Relations
Hannah James, New York, +1-646-582-4947
[email protected]

Source: Fitch Ratings

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