Farmer Mac Makes U-Turn on Rating

Farmer Mac has had a change of heart, and the government-sponsored enterprise will get a credit rating after all."This has become a point of contention, and we simply want to remove it as such," said Farmer Mac president and chief executive Henry Edelman. In its July 29 earnings release, Farmer Mac warned that the Farm Credit Administration has proposed new capital requirements on the Farm Credit Banks that could "diminish" its swap business with the banks unless Farmer Mac gets a triple-A or a double-A rating. Mr. Edelman still says the rating proposal does "not make sense" because Farmer Mac is a GSE. Nevertheless, Farmer Mac will begin talking to the rating agencies. "We believe that Farmer Mac's financial condition and solid outlook, as well as its status as a GSE, make it worthy of a very high rating," Mr. Edelman said. The secondary-market agency also announced that it will pay its first dividend ($0.10) on all three classes of Farmer Mac common stock beginning in the fourth quarter. In addition, it announced its first stock buyback. The board of directors has authorized repurchase of up to 10% of class C nonvoting common stock.