Fitch Ratings said that, based on the Obama’s administration confirmation of ongoing support for the GSEs, the rating agency will likely maintain its long- and short-term issuer default ratings at ‘AAA'/'F1+’ and the long-term senior debt ratings at ‘AAA’ for both Fannie Mae and Freddie Mac.
The rating firm anticipates that these current ratings will remain in place indefinitely. Both institutions maintain guaranty and debt obligations that extend as far out as 30 years.
Specifically related to the two GSEs, the government's report stated that the administration is committed to ensuring that these agencies have enough capital to perform under any guaranty issued now or in the future and the ability to meet any of their debt obligations.
"Such a definitive statement by the Administration confirms on-going support to Fannie and Freddie," said Thomas Abruzzo , a managing director at Fitch. "While each of these proposals has the potential to add stability to the housing sector, this plan is just the beginning of any restructuring in the U.S. market."
Abruzzo added that it is likely that the ultimate housing reform plan can change and will likely take time before any change is realized.
Fitch also noted that on the upside, each of the proposals could eventually lead to an increase in private-label RMBS issuance.
"Each of these proposals is a potential catalyst for an eventual increase in issuance of private label U.S. RMBS," said Kevin Duignan, group managing director at Fitch. "The proposals also increase the likelihood that a U.S. covered bond market will develop in the mid-term."