Moody's: Fannie Mae unaffected

Moody's Investors Service commented that the Office of Federal Housing Enterprise Oversight's (OFHEO) report of the examination of Fannie Mae does not contain information on Fannie Mae that would affect its ratings of the U.S. Government-Sponsored Enterprise (GSE).

The report describes in detail the breadth and depth of the governance, operational and control issues at the GSE, the resolution of which is the minimum requirement before Moody's would contemplate upgrading Fannie Mae's bank financial strength rating (BFSR).

These issues prompted Moody's to downgrade Fannie Mae's BFSR to B+ with a stable outlook from A- on March 28.

The rating agency also affirmed Fannie Mae's Aaa senior unsecured debt rating with a stable outlook and its Prime-1 rating for short-term debt.

According to the rating agency, an upgrade of Fannie Mae's BFSR and baseline credit assessment would become more likely once Fannie Mae files financial statements on a timely basis; resolves all existing regulatory, operational, governance and control issues without identifying any new significant issues; exhibits consistent profitability over several quarters; and maintains tight interest rate risk controls and credit risk controls.

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