S&P Indicates It May Downgrade Fannie, Freddie Ratings

Standard and Poor's revealed Friday afternoon that it has placed some of its credit ratings on the government-backed mortgage finance companies on CreditWatch Negative. While S&P said that it affirmed its senior unsecured debt ratings on Fannie and Freddie, it warned that its risk-to-the-government, subordinated debt, and preferred stock ratings for the companies could be downgraded. S&P credit analyst Victoria Wagner said, "The affirmation of the senior unsecured debt ratings reflects the strong explicit and implicit support these government-sponsored enterprise (GSE) securities hold in the marketplace." The key public policy role and the key liquidity role the congressional chartered GSEs have in the U.S. mortgage markets is underscored by the most recent public demonstrations of government support by the U.S. Treasury, S&P... [read full story]