Fitch Ratings has affirmed two money market funds (MMF) managed by Federated Hermes (UK) LLP and Hermes Fund Managers Ireland Limited, respectively, at 'AAAmmf'.

Federated Hermes Short-Term Sterling Prime Fund

Federated Hermes Short-Term U.S. Prime Fund

KEY RATING DRIVERS

The affirmation of the MMF Ratings is driven by the funds' high credit quality and diversification, high levels of daily and weekly liquid assets and low exposure to interest-rate and spread risks. The ratings also reflect the capabilities and resources of Federated Hermes (UK) LLP and Hermes Fund Managers Ireland Limited as investment advisors.

CREDIT RISK

The funds' Portfolio Credit Factor (PCF), which is a risk-weighted measure that considers the credit quality and maturity profile of the portfolio securities, met Fitch's 'AAAmmf' rating criterion of 1.5 or less throughout the review period.

LIQUIDITY RISK

The funds had at least 10% of total assets in securities offering daily liquidity and at least 30% of total assets in securities providing weekly liquidity, consistent with the 'AAAmmf' rating range, throughout the review period.

MARKET RISK

The funds' weighted average maturity and weighted average life were below 60 days and 120 days (the 'AAAmmf' rating range), respectively, throughout the review period.

FUND PROFILE

Fitch considers the legal and regulatory framework of the funds satisfactory. The funds are sub funds of the umbrella funds, Federated Hermes Cash Management Funds and Federated Hermes International Funds plc, which are respectively a UK UCITS and an investment company with variable capital that falls under the UCITS directive and is domiciled in the UK and in Ireland. The funds are respectively authorised and supervised by the Financial Conduct Authority and the Central Bank of Ireland as low volatility net asset value money market funds as defined in the UK Money Market Funds Regulation and the Regulation (EU) 2017/1131.

The funds' respective investment objectives are to maximise current income consistent with the preservation of principal and liquidity by investing in a diversified portfolio of high-quality sterling-denominated short-term debt and debt-related instruments, and to achieve current income while maintaining stability of principal and liquidity.

INVESTMENT MANAGER

The funds are managed by Federated Hermes (UK) LLP and Hermes Fund Managers Ireland Limited, which are indirect wholly-owned subsidiaries of Federated Hermes, Inc. Federated Hermes, Inc. had USD631.9 billion assets under manangement as of June 2022, including USD439.7 billion in liquidity products. Although the parent company is not rated, Fitch considers Federated Hermes, Inc. suitably qualified, competent and capable of managing the rated funds given the manager's financial position, established investment and operational processes and long track record of managing cash and liquidity products.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

The ratings are at the highest level on Fitch's scale and therefore cannot be upgraded.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Fitch's stress testing shows that the ratings are robust at their current levels. The ratings may be sensitive to material adverse changes in the credit quality, market risk or liquidity profile of the funds. A material adverse and sustained deviation from Fitch guidelines for any key rating drivers could cause the ratings to be downgraded.

RATING ACTIONS

Entity / Debt

Rating

Prior

Federated Hermes Short-Term Sterling Prime Fund

MMF

AAAmmf

Affirmed

AAAmmf

Federated Hermes Short-Term U.S. Prime Fund

MMF

AAAmmf

Affirmed

AAAmmf

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VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

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