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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 August 16, 2011, Fitch Ratings Limited (“Fitch”) affirmed the long-term issuer default rating and senior unsecured debt rating of Fannie Mae at ‘AAA’, with a Ratings Outlook of Stable, following a similar affirmation of 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 Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2011, including the
Risk Factors set forth therein.
ANNEX 1
TO PRICING SUPPLEMENT DATED October 18, 2011
RELATING TO: 1.375% Notes Due November 15, 2016
SUPPLEMENTAL PLAN OF DISTRIBUTION
We will sell $3,000,000,000 principal amount of the Notes to the Dealers listed under “Offering” in this Pricing Supplement at the Dealer Purchase Price specified in this Pricing Supplement. In addition, to facilitate secondary market transactions, from time to time we may sell up to $750,000,000 principal amount of the Notes (the “Additional Notes”) in connection with agreements by Fannie Mae to repurchase the Additional Notes. The Additional Notes will be held in an account at the Federal Reserve Bank of New York. It is expected that the Additional Notes will be available for sale to approved dealers through a multiple price auction process. We expect that the results of each auction will be posted as soon as possible following the completion of each auction on Bloomberg and Reuters. We may discontinue sales of Additional Notes at any time without notice.
This Pricing Supplement may also be used in connection with the issuance
by Fannie Mae of any Additional Notes.
