S&P: Capital Will Be Key to Fannie Ratings

Fannie Mae's ability to meet regulators' capital requirements will be a key determinant in what happens to the credit ratings of Fannie's subordinate debt and preferred stock, Standard & Poor's analysts said in a Sept. 27 teleconference.The recent agreement between the Office of Federal Housing Enterprise Oversight and Fannie is "encouraging" but has not changed S&P's assessment of Fannie's subordinate debt and preferred stock ratings, which the rating agency has placed on watch for a possible downgrade, said Victoria Wagner, an S&P financial services rating analyst. S&P analyst Michael DeStefano said the rating agency has confidence that Fannie Mae "can generate capital ... quickly," but added that analysts would "still have to get comfort on some of the technical ... issues" involved before changing their view of the affected ratings. Standard & Poor's can be found online at http://www.standardandpoors.com.