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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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From: Paul Kern8/22/2008 11:38:32 AM
   of 110194
 
Moody's Cuts Fannie, Freddie Ratings, Sees Treasury Support
Last update: 8/22/2008 11:37:19 AM

DOW JONES NEWSWIRES

Moody's Investors Service slashed its preferred-stock ratings for Fannie Mae (FNM) and Freddie Mac (FRE) to just above junk status as it increasingly expects the Treasury Department to directly support the firms "in an effort to thwart broader negative economic effects."

In addition, the ratings firm moved the firms' bank financial-strength grades all the way down to D+ from B- as Moody's believes Fannie and Freddie's "financial flexibility to manage potential volatility in its mortgage risk exposures is constricted."

Bank financial-strength ratings are a measurement of the likelihood that a firm will require "extraordinary financial assistance" from third parties, rather than the probability that a financial institution would receive such support.
Both sets of ratings could be cut further, said Moody's.
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