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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
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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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: Fannie Mae Rating Affirmed At 'AAA/A-1+'; Outlook Stable 'AA-' Rating Affirmed for Preferred Stocks; Outlook Negative. |
NEW YORK Feb. 29, 2008--Standard & Poor's Ratings Services said that it affirmed its 'AAA/Stable/A-1+' senior debt rating on Fannie Mae. It also affirmed its 'AA-/Negative/--' risk-to-the-government ratings and 'AA-' subordinated debt and preferred stock ratings on Fannie Mae. The negative outlook is based on a lower earnings outlook for 2008 and its related effect on Fannie Mae's capital position.
"The longer duration of the weak housing markets in the U.S. and weak pricing for mortgage loans in the capital markets have increased Fannie Mae's credit-related expenses, which are approaching an all-time high, and the view for 2008 is for higher credit losses. The traditional credit expenses--net charge-offs and real estate owned-related expenses--are under Fannie Mae's previous peak of cycle losses. However, when we include the fair value-related credit expenses associated with the buy-outs of delinquent loans from securitizations, total credit costs have reached a new high," said Standard & Poor's credit analyst Victoria Wagner.
Fannie Mae reported a GAAP after-tax loss for fourth-quarter 2007 of $3.6 billion. The GAAP after-tax loss for the year was $2.1 billion. This compares to our core earnings (adjusted for the interest rate net derivative fair value losses) of $125 million. The key drivers of the loss for the fourth quarter and the year were a combination of higher credit losses and fair value marks on the interest rate derivatives, and fair value credit expenses on delinquent loans repurchased from mortgage-backed securities (MBS) trusts; and losses on guarantee contracts.
With the dislocation in the private-label MBS market, Fannie Mae's market share increased significantly in 2007, ending the year at 45%. The government support for Fannie Mae's public policy role in the markets was recently strengthened with the temporary raising of its conforming loan limit to $729,750, for loans originated between July 1, 2007, and Dec. 31, 2008.
With the Feb. 27 filing of its 2007 10-K, Fannie Mae is now a timely filer of its audited financial statements. Also, it has reported to the Office of Federal Housing Enterprise Oversight (OFHEO)--its safety and soundness regulator--that remediation activities under the Consent Order are nearing completion. As a result of this progress, OFHEO yesterday lifted the portfolio growth cap limit it had imposed as a regulatory restriction due to the accounting restatement. OFHEO has also stated that it is discussing with Fannie Mae the gradual decreasing of the current 30% surplus over minimum OFHEO-directed capital requirement.
The 'AAA/Stable/A-1+' rating on Fannie Mae's senior unsecured debt reflects the company's very strong business franchise, status as a government-sponsored enterprise, and under our government-related criteria, its status as a public-policy institution and the key liquidity role it has in the U.S. mortgage capital markets. The ratings on Fannie Mae's senior unsecured securities also reflect the implicit U.S. government support of these securities, as it relates to its charter and governing legislation.
The negative outlook on the 'AA-' ratings reflects the negative trends in earnings and capital. Now that credit-related expenses are fast approaching a new peak for Fannie Mae, 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% surplus over minimum capital measures, remains a key rating issue. We assess Fannie Mae's capital level on a managed assets basis given the credit guarantee it provides to its MBS. At the end of 2007, its adjusted total equity-to-total managed assets ratio was 1.76% versus 1.83% at year-end 2006 and 2.34% at year-end 2005. As long as the quarterly GAAP earnings volatility remains high and losses climb significantly above the 2007 level, the ratings remain under pressure. Also, the negative trend in managed capital ratios is a factor in the ratings outlook. Alternatively, if earnings volatility diminishes, the outlook could be revised to stable.
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