Your article “A Moody’s B of A Downgrade Could Crimp Money Funds” was at least confusing if not misleading.
The end of the article correctly explains that, so long as two nationally recognized statistical rating agencies rate Bank of America in their highest short-term category, variable-rate demand notes backed by the bank will remain first-tier securities for money market funds.
Bank of America is currently rated A-1 by Standard & Poor’s and F1 by Fitch. Therefore, a downgrade by Moody’s of the bank to P-2 will not “crimp money funds,” nor will it “have an immediate impact on so-called 2a-7 eligibility,” “force tax-exempt money market funds to sell many of their VRDOs,” or “shrink that universe of eligible letter-of-credit providers.”
The fact is that money market funds will be able to hold just as many Bank of America-backed VRDNs after a Moody’s downgrade as they do today.