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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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S&P: Freddie Mac 'AAA/A-1+' Senior Unsecured Rating Affirmed; Outlook Stable; AA- Rating Affirmed for Preferred Stocks; Outlook Negative. |
NEW YORK Feb. 29, 2008 Standard & Poor's Ratings Services said today that it affirmed its 'AAA/A-1+' senior unsecured debt ratings on Freddie Mac. The outlook remains stable.
At the same time, we affirmed our 'AA-' rating on the risk-to-the-government, subordinated debt, and preferred stock ratings on Freddie Mac. The outlook remains negative
"The ratings on Freddie Mac's senior unsecured debt reflect the company's very strong business franchise, its status as a government-sponsored enterprise (GSE), and under our government-related criteria, its status as a public policy institution and its key role regarding liquidity in the U.S. mortgage capital markets. The ratings also reflect the implicit U.S. government support of these securities, as it relates to Freddie Mac's charter and governing legislation," said Standard & Poor's credit analyst Victoria Wagner.
The negative outlook on the risk to the government, subordinated debt, and preferred stock ratings on Freddie Mac is based on a lower earnings outlook for 2008 and its related effect to Freddie Mac's capital position. For 2008 and 2009, Freddie Mac is now estimating higher credit-related expenses because of the longer duration of the weak housing markets in the U.S. and weak pricing for mortgage loans in the capital markets. During this time, we expect credit-related expenses for Freddie Mac to approach an all-time high. The current level of plus 90-day past due loans ended the year at only 65 basis points (bps), and net-charge-offs (NCOs) for the year were $495 million or 3 bps. However, in fourth-quarter 2007, annualized credit losses were higher at 5.4 bps. Freddie Mac's forecast for 2008 indicates total credit losses will reach $2.2 billion or 12 bps. For 2009, Freddie Mac is forecasting NCOs of $2.9 billion or 14 bps. At year-end 2007, the ending loan-loss reserve reached $2.8 billion, which equates to 1.5 years' worth of coverage for expected NCOs.
The negative outlook on the risk-to-the government, subordinated debt, and preferred stock ratings reflect the negative trends in earnings and capital. Now that credit-related expenses are fast approaching a new peak for Freddie Mac, its core earnings capacity to withstand the higher credit costs for 2008 is significantly lower, given the narrowing of its net interest margin and higher operating expenses. The level of capital commitment to support the core business, regardless of any change in the status of the regulatory imposed 30%, remains a key rating issue. We assess Freddie Mac's capital level on a managed-assets basis, given the credit guarantee it provides to its MBS. At year-end 2007, Freddie Mac's adjusted total equity-to-total managed assets ratio was 1.52%, compared with 1.98% at year-end 2006 and 2.14% at year-end 2005. These ratings will remain under pressure if quarterly GAAP earnings volatility remains high and if losses increase significantly above the 2007 level. Alternatively, if earnings volatility diminishes, the outlook could revert to stable.
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| Stuff to look at |
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S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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