Moody's: Fannie Mae's Rating May be Cut After Quarterly Loss Report - ProgramBusiness

Moody’s: Fannie Mae’s Rating May be Cut After Quarterly Loss Report

Today Moody's Investors Service announced that it may consider cutting its bank financial strength rating on Fannie Mae, the largest provider of financing for U.S. home loans, after it reported a $3.6 billion quarterly loss. However, the agency did affirm Fannie Mae's Aaa senior debt and Prime-1 short-term debt ratings with a stable outlook.

Published on February 28, 2008

"This loss exceeded our expectations and represents a significant deterioration of surplus regulatory capital," Moody's said in a statement.

Moody's warned that it expected Fannie Mae to report sizeable losses in the first half of 2008, and possibly a net loss for the year, due to continued deterioration in U.S. residential mortgages.

However Moody's said that its concerns were partially mitigated by news that regulator the Office of Federal Housing Enterprise Oversight may decrease the amount of surplus capital required to be held, reducing the probability Fannie Mae would breach the minimum.

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