S&P Cuts Some Fannie, Freddie Ratings

Washington Post (08/12/08) P. D4; Shenn, Jody
Standard & Poor's lowered the preferred stock and subordinated debt ratings of Fannie Mae and Freddie Mac to "A-" from "AA-." The downgrade by three levels comes a week after the mortgage finance firms reported quarterly losses three times what analysts had anticipated. S&P left their senior debt ratings at "AAA" because of the implied support they would receive from the U.S. government. "The lower risk-to-the-government rating reflects the company's worsening financial profile, which is pressured by the continued home price declines in some of its key markets, higher credit related expenses, and capital challenges," S&P analyst Victoria Wagner wrote in the statement about Fannie Mae.