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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.