S&P Drops FHLBank Outlook to Negative

Standard & Poor's has downgraded its ratings outlook on the Federal Home Loan Bank of Des Moines from stable to negative, citing its investment in mortgage partnership finance assets.S&P said the downgrade is due, in part, to the "longer-dated" residential loans that make up MPF. The rating agency also cited "the degree of hedging required to facilitate the growth of MPF loans versus advances to its members." At the end of March, the Des Moines FHLBank's MPF portfolio totaled $16.1 billion. Its allowance for credit losses was $6 million, compared with $3.3 million a year earlier, and its earnings declined by 28% in the first quarter. The Des Moines FHLBank downplayed the rating change, noting that, despite the downgrade, S&P reaffirmed its overall triple-A credit rating.