NEW YORK (Standard & Poor's) May 20, 2009--Standard & Poor's Ratings Services
said today that its 'AAAm' principal stability fund rating on the Colorado
Surplus Asset Fund Trust (CSAFE) remains on CreditWatch with negative
implications, where it was first placed Feb. 27, 2009.
The CreditWatch action was based on uncertainty surrounding the
redemption share price or net asset value (NAV) the pool expects to receive
from its investments in the Reserve Primary Fund. On Feb. 26, the Reserve
stated that it would set aside $3.5 billion in a special reserve to cover
potential damages and legal fees.
On May 5, 2009, the SEC filed fraud charges against several entities and
individuals who operate the Reserve Primary Fund for failing to provide key
material facts to investors and trustees about the fund's vulnerability as
Lehman Brothers Holdings Inc. sought bankruptcy protection. We believe that in
bringing the enforcement action, the SEC also seeks to expedite the
distribution of the fund's remaining assets to investors. Although this SEC
action is an important development in resolving the distribution of fund
shares, it does not, in our view, eliminate the uncertainty that prompted the
CreditWatch actions on CSAFE.
We will continue to monitor the situation and revise our opinion if
necessary. The placement on CreditWatch negative signifies that we could
affirm or lower the rating pending the final NAV payout to Reserve Primary
Fund holders and the pools' ability to maintain a stable NAV.
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