US - Rating agency Standard & Poor's (S&P) is developing criteria for evaluating multi-manager hedge funds.
Additionally, the agency is probing the ongoing securitisation potential of the $300bn hedge fund market, made up of about 5,000 hedge funds worldwide.
S&P said it is currently examining a number of proposals for hedge funds of funds securitisations, and aims to publish criteria for rating these transactions this year.
Until now the hedge fund industry has been characterised by limited regulation and opaqueness. The ratings process will require that the portfolio of assets conform to strict valuation, documentation, reporting, and monitoring guidelines, said S&P.
The agency added that it intends to use an approach that is similar to the one that is used for market value collateralised debt obligations in which the rated debt is backed by the market value of “eligible assets'' discounted to reflect their inherent riskiness.
By Madhu Kalia
The registration deadline for the Workplace Savings & Benefits Awards 2019 is today.
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