Fitch Ratings has affirmed the long-term issuer default ratings of both Fannie Mae and Freddie Mac at AAA. However, the rating outlook for both companies remains negative. Both the IDR and outlook remain linked to the United States’ sovereign rating.
The ratings will remain linked to the sovereign unless Fitch feels
Fitch has also affirmed Fannie and Freddie’s preferred stock ratings at C/RR6, which it said is because of the ongoing deferral of interest payments and very low prospects for investors to recover them.
The subordinated debt of Fannie and Freddie each have an AA-minus rating, which is based on the Federal Housing Finance Agency’s willingness to support those obligations and the fact that principal and interest payments remain current.
“Fitch would likely downgrade the ratings if the FHFA changes its position on the payment of the GSEs’ subordinated debt obligations or if there is any deferral of interest or principal payments,” the ratings agency said.
