S&P Global Ratings has assigned Smart Cash Euro a AAAf fund credit quality rating and an S1+ fund volatility rating. Both are the highest possible ratings on their scales.
A few words about S&P
S&P Global Ratings is one of the world's three major credit rating agencies, alongside Moody's and Fitch. For more than 150 years, it has assessed the financial strength of governments, companies, banks and funds. Risk committees and market participants around the world use its ratings as a benchmark.
Two ratings, two questions
To rate a cash management fund like Smart Cash, S&P sets out to answer two questions: is your money protected, and is your yield stable?
AAAf: is your money protected?
The Fund Credit Quality Rating measures how well your money is protected against losses caused by a default. AAA means "extremely strong" credit quality: the top of the scale.
| Rating | Capacity to pay | Category |
|---|---|---|
| AAA | Extremely strong | Investment grade |
| AA | Very strong | Investment grade |
| A | Strong, somewhat sensitive to an economic downturn | Investment grade |
| BBB | Adequate, vulnerable in difficult economic conditions | Investment grade |
| BB | Major uncertainties | Speculative |
| B | Vulnerable | Speculative |
| CCC / CC / C | Highly vulnerable, default possible or near | Speculative |
| D | Payment default | Default |
From AA to CCC, a "+" or "-" refines the rating within each category: A+ sits at the top of the A category, A- at the bottom.
The "f" stands for fund: the rating applies to the Smart Cash Euro product itself. This is the one that matters to you, because your money is held by the fund and never passes through Spiko's accounts.
S1+: is your yield stable?
The Fund Volatility Rating measures how sensitive the fund is to market movements: interest rates, credit spreads, liquidity and currency. With S1+, S&P expects Smart Cash Euro's monthly performance to vary extremely little.
| Rating | Sensitivity to market changes | Risk level comparable to... |
|---|---|---|
| S1+ | Extremely low | Highest-quality securities with an average maturity of 12 months or less |
| S1 | Low | Government bonds with 1 to 3 years to maturity |
| S2 | Low to moderate | Government bonds with 3 to 7 years to maturity |
| S3 | Moderate | Government bonds with 7 to 10 years to maturity |
| S4 | Moderate to high | Government bonds with more than 10 years to maturity |
| S5 | High | Funds exposed to significant risks: concentration, leverage, complex or illiquid securities |
| S6 | Highest | Highly speculative, poorly diversified strategies that combine several significant risks |
The "+" only exists in the S1 category: it sets apart the most stable funds on the scale.
How S&P assessed Smart Cash Euro
S&P carried out full due diligence on how Smart Cash Euro works, which we explain in our article Smart Cash: everything you need to know about our new product. The agency focused its analysis on three points:
1. The strength of the bank counterparty. The credit rating rests first and foremost on BNP Paribas, rated A+/Stable/A-1 by S&P.
2. The safeguards built into the fund. The swap resets every business day, which limits the potential loss in the highly unlikely event of a BNP Paribas default.
3. The quality of management. S&P reviewed Spiko's organization, risk management, compliance and technology, and rated them "strong".
For the volatility rating, since Smart Cash Euro still has a short track record, S&P relied on the past performance of comparable products.
What this means for you
Smart Cash Euro's rate and mechanics stay the same. What's new: an independent third party, one of the most recognized in the world, confirms the quality of the product you use to put your treasury to work.
S&P reviews the rating every year and analyzes the fund's reports every month to check that it is still justified. You can find S&P Global Ratings' full assessment here.
"Getting S&P's highest rating confirms the strength of the model we built with Amundi, BNP Paribas and CACEIS."
Paul-Adrien Hyppolite, co-founder and CEO of Spiko
