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RECENT DEVELOPMENTS
Ratings Matters
Standard and Poor’s Ratings Services
On August 8, 2011, Standard and Poor’s Ratings Services (“Standard & Poor’s”) announced that they had downgraded Fannie Mae senior unsecured long term debt from “AAA” to “AA+” with a negative outlook. This announcement followed a similar action by Standard & Poor’s taken on August 5, 2011 on the United States sovereign long term debt rating. Standard & Poor’s also announced that Fannie Mae’s debt ratings were no longer on CreditWatch Negative, and that the ratings on Fannie Mae short-term debt and subordinated debt remain unchanged at “A-1+” and “A”, respectively.
The action taken by Standard & Poor’s with respect to Fannie Mae’s ratings was announced at the same time as similar ratings actions on other institutions with ties to the United States Government, including Freddie Mac, select Federal Home Loan Banks, and the Farm Credit System.
Moody’s Investors Service
On August 2, 2011, Moody’s Investors Service (“Moody’s”) confirmed the Aaa rating of institutions directly linked to the United States Government, including Fannie Mae. Moody’s also announced that the rating outlook for Fannie Mae and other institutions directly linked to the United States Government was being revised to negative, following a similar revision on the outlook of the United States Government.
Fitch Ratings Limited
On November 28, 2011, Fitch Ratings Limited (“Fitch”) affirmed the long-term issuer default rating and senior unsecured debt rating of Fannie Mae at ‘AAA’, but revised its Ratings Outlook on Fannie Mae’s long-term issuer default rating to Negative from Stable. This action followed a similar action by Fitch on the United States sovereign rating. Fitch has previously indicated that the ratings of Fannie Mae and other issuers with ties to the United States Government would ultimately be aligned with the United States sovereign rating assigned by Fitch.
For additional information on the impacts of a credit rating downgrade on Fannie Mae and its securities, please refer to our most recent periodic reports filed with the U.S. Securities and Exchange Commission, including any Risk Factors set forth therein.
