Moody’s has created a new five-point rating scale for money market funds to take into account factors that proved to be critical in the credit crisis, including: a fund portfolio’s underlying asset quality, ability to preserve principal while providing liquidity, susceptibility to market risk and the likelihood of support from its sponsor in the event of a “run” on the fund.

The credit crisis subjected money market funds to “significant stresses that the sector had not previously experienced,” Moody’s said, pointing to Lehman Brothers’ insolvency, the collapse of the Reserve Primary Fund and the inability of 30 other funds to meet redemptions in September 2008.

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