Following the recent downgrading of credit ratings for a number
of financial institutions by Moody's Investor Services, the
Central Bank of Ireland (the "Central Bank") has
clarified its position regarding breaches of its minimum credit
ratings requirements for prime brokers and other
counterparties.
Prime brokers
Guidance Note 2/11 "Professional collective investment
schemes: Appointment of prime brokers and related issues" (the
"Guidance Note") provides that a prime broker, or its
parent company, must have a minimum credit rating of A-1 (from
Standard and Poor's) or equivalent. In the event of a
downgrade of a prime broker to A-2 or equivalent (but not lower),
the Central Bank has indicated that it will permit the relationship
with the prime broker to remain in place where net exposure
of the fund to the prime broker is less than 40% of net asset
value (or 20% / 30% in the event that the fund is a
professional investor fund). This requirement will apply
