Fitch Puts Fund Fee Debt Instruments on Watch

Fitch, an international financial rating agency, has placed its two mutual fund fee securitizations on ‘Rating Watch Negative’ because of market uncertainty following the Sept. 11 attacks, the company announced today.

The securitzations finance debt that is structured off of mutual fund 12b-1 fees and contingent deferred sales charges (CDSC), and therefore largely dependent on the funds’ net asset values. The two banks that offer the instruments rated by Fitch, Putnam Lovell Securities and Constellation Financial Management Co., have purchased receivables from a large number of mutual fund companies and sold them as structured debt instruments to institutional investors, such as pension funds and insurance companies.