NEW YORK–(EMWPresswire)–Fitch Ratings has affirmed Freddie Mac’s (NYSE:FRE) long-term Issuer
Default Rating (IDR) at ‘AAA’. Fitch has also has placed Freddie Mac’s
‘A+’ preferred stock on Rating Watch Negative. A complete list of
ratings is provided at the end of this release.
Today’s affirmation of Freddie Mac’s long-term IDR and senior debt
rating reflect the high probability of external support and the
company’s importance to the U.S. housing market. This likelihood has
increased recently due to the U.S. Treasury’s plan to maintain the
confidence and stability of the financial markets and, in particular,
maintaining the liquidity of Government Sponsored Enterprise (GSE) debt.
Also, the Federal Reserve Board has authorized lending to Freddie Mac,
if necessary, on a secured basis.
Fitch’s placement of Freddie Mac’s preferred stock on Rating Watch
Negative reflects the uncertainties surrounding the U.S. Treasury’s
plans, in general, and potential impact on preferred shareholders
specifically, from any needed equity investment from the Treasury. While
Fitch believes the Treasury has restored investor confidence, Freddie
Mac faces some execution risk surrounding its upcoming equity raise due
to the current market environment.
While dramatic change in the competitive landscape offers improved
pricing and opportunities longer term, Fitch believes Freddie Mac’s
ability to manage credit risk will be significantly challenged
throughout 2009 and into 2010. In resolving the Negative Rating Watch,
Fitch will consider Freddie Mac’s ability to raise capital as planned.
Fitch will continue to monitor Freddie Mac’s capital levels relative to
current and expected portfolio performance. Fitch will also seek
clarification on Treasury’s plans for GSEs.
Fitch has affirmed the following ratings with a Stable Outlook:
— Long-term IDR ‘AAA’;
— Senior unsecured ‘AAA’;
— Subordinated debt ‘AA-‘;
— Short-term IDR ‘F1+’;
— Short-term debt ‘F1+’;
— Support ‘1’;
— Support floor ‘AAA’.
Fitch has also placed the following rating on Rating Watch Negative:
— Preferred stock ‘A+’.
available on the agency’s public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch’s code of conduct, confidentiality, conflicts
of interest, affiliate firewall, compliance and other relevant policies
and procedures are also available from the ‘Code of Conduct’ section of
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