Dublin-based Custom House Administration and Corporate Services has become the first hedge fund admi...
Dublin-based Custom House Administration and Corporate Services has become the first hedge fund administrator to receive a rating from Moody's Investor Services.
Dermott Butler, chairman of Custom House, said the Baa1 rating would help the administrator in attracting business but may also help ratings agencies in rating collateralised fund obligations (CFO) offered by hedge fund groups that use Custom House as an administrator.
CFOs are tranches of debt normally issued by funds of hedge funds, which raise money for the manager while providing investors in the tranche with an income stream. Some CFO issuers have had the tranches rated by Moody's and Standard & Poor's to help attract investors.
Vania Schleef from Moody's global credit research team said having a rated administrator of a hedge fund on which CFOs are based would answer many questions the ratings agency may otherwise have when rating CFOs using unrated administrators but Moody's would take other factors into account when rating CFOs.
She added Moody's pays special attention to the administrator's main risk ' fiduciary risk of moving money out of into funds on the basis of the net asset values administrators assign to portfolios ' when rating Custom House. Moody's has already rated two custodian banks.
Moody's said the ratings process assesses organisational structure, risk management capabilities and operational controls. It added the Baa1 rating for Customs House is equivalent to a comparable investment grade debt rating.
Butler hopes to have Custom House re-rated by Moody's next year.
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