Moody's Revises Fannie Outlook

A second major rating agency, Moody's Investors Service, has changed its outlook for certain Fannie Mae ratings.Moody's revised its outlooks for Fannie's subordinated debt and preferred stock ratings from stable to negative Sept. 28 and placed the government-sponsored enterprise's financial strength rating on review for possible downgrade. Moody's said the rating actions "reflect findings by the Office of Federal Housing Enterprise Oversight which have created uncertainty with respect to Fannie's capital levels." Analysts from another major rating agency, Standard & Poor's Ratings Services, had said in a teleconference a day earlier that Fannie Mae's ability to meet regulators' requirements in terms of capital will be a key determinant in what happens to S&P's ratings of Fannie's subordinate debt and preferred stock, which are on watch for a possible downgrade.