Moody's Investors Service slashed the preferred stock ratings of Fannie Mae and Freddie Mac to ‘Baa3’ from ‘A1’, today, and cut the bank financial strength ratings down to a meager ‘D+’ from ‘B-’. Both ratings remain on review for possible further downgrade.

The rating agency said it took these actions out of concern that both GSEs may not have enough financial flexibility to manage potential volatility in their mortgage risk exposures. The rating agency also affirmed a widespread market belief that both agencies may need assistance from the U.S. Treasury.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.