Standard & Poor's Corp. doesn't expect to take any more ratings actions against money market funds for derivative investments, a senior official said.

Sanford Bragg, an S&P managing director, said no more downgrades or credit watches are expected to follow two actions last month, because money funds rated by the agency have adopted approved investment policies.

"We're watching closely," Mr. Bragg said. "But unless someone stumbles, we wouldn't expect any further action."

S&P rates 200 money funds, about a quarter of the money funds available to investors.

Regulators have criticized money funds for buying derivatives that are too risky and subject to losses during rising interest rates. S&P joined the criticism last month, with two unusual ratings actions.

In the first, S&P put a government money fund managed by Bank of America on credit watch for possible downgrade because of its investments in so-called structured notes.

In the other action, S&P sharply downgraded a Wilmington Trust Corp. money fund because of investments in stuctured and variable rate notes.

Wilmington Trust has defended its investments, and dropped S&P's ratings of its fund. Bank of America, by contrast, sold its structured notes, and has kept the S&P rating.

As a result of the sale, and stronger risk controls, Mr. Bragg said he expected S&P to reaffirm its top tier rating of the Bank of America government fund "very soon."

A source close to S&P said that other money funds rated by the agency have either sold derivatives considered too risky, or have begun doing so.

S&P has estimated that as of May, some $5 billion to $10 billion of the assets in taxable money market funds were in types of derivatives too risky for the funds.

Mr. Bragg said that currently these derivatives are selling at 5% below face value. This means that money funds could collectively lose $250 million to $500 million dollars by selling the notes before maturity.

SEC Urges 'Orderly' Sale

Concern over potential losses prompted the SEC last week to send a letter to the Investment Company Institute urging money fund managers to sell securities "in an orderly manner" that protects shareholders.

The commission said it didn't have any evidence that would either support or refute Mr. Bragg's contention that money funds arc changing their investment policies.

But SEC assistant director Robert E. Plaze said that if the funds are doing so, the SEC would "welcome it."

A. Michael Lipper, president of Lipper Analytical Services -- in Summit, N.J., said money funds probably are shedding controversial derivatives, although he has no data to support the belief.

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