GSEs' IDRs Affirmed; Preferred Stock Mixed

The triple-A long-term Issuer Default Ratings and senior debt ratings of Fannie Mae and Freddie Mac have been affirmed by Fitch Ratings, but Fannie's preferred stock rating has been downgraded and Freddie's has been placed on Rating Watch Negative. Fannie Mae's preferred stock rating was downgraded from AA-minus to A-plus and remains on Rating Watch Negative. Freddie Mac's preferred stock rating stands at A-plus. The affirmations of the government-sponsored enterprises' IDRs and senior debt ratings "reflect the high probability of external support" as well as the GSEs' "importance to the U.S. housing market," the rating agency said. The downgrade of Fannie's preferred stock "reflects the higher proportion of preferred stock to core capital" following the "recent erosion of core capital due to operating losses," Fitch said. The placement of Freddie's preferred stock rating on Rating Watch Negative "reflects the uncertainties surrounding the U.S. Treasury's plans, in general, and potential impact on preferred shareholders specifically, from any needed equity investment from the Treasury," the rating agency said. Fitch can be found online at http://www.fitchratings.com.