S&P Lowers Rating on FHLBank-NY

Standard & Poor's has lowered the Federal Home Loan Bank of New York's coveted AAA credit rating to AA-plus due to a $183 million loss on a sale of $1 billion in downgraded manufactured housing securities."While the bank has disposed of these [MH] securities, which helps to reduce its credit risk profile, the FHLB-NY's retained earnings were cut in half, and a significant quarterly loss will be recognized," said S&P's credit analyst Jonathan Ukeiley. The New York FHLBank has suspended its third-quarter dividend to prevent further drain on its retained earnings, which totaled $240 million at the end of the second quarter. While the bank rebuilds it retained earnings, "it is expected that profitability will remain depressed given the low interest rate environment," the S&P analyst said. Meanwhile, Fitch Ratings took no action on its AAA rating of the bank.