WASHINGTON -- Standard & Poor's Corp. has assigned a B-plus risk rating to a Piper Jaffray Inc. bond fund that became the focus of federal and state investigations and investor lawsuits after suffering major derivatives-related losses earlier this year.

Standard & Poor's said Friday that it assigned this new risk rating for the first time to the Institutional Government Income Fund as well as three closed-end funds that are managed by Piper Capital Management Inc.

At the same time, the rating agency said it is retaining its AAA credit rating for the government fund because it is invested in "government securities and repurchase agreements," which have "extremely strong protection against losses from credit default."

The risk rating, which Standard & Poor's began using earlier this year and has applied to about 70 of 150 rated bond funds, reflects the volatility of the potential rate of return. The rating is based on a monthly review of the funds' holdings and strategies as well as on historical volatility and management, Standard & Poor's officials said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.