Research Update: Fannie Mae Ratings Placed On CreditWatch Negative; Senior Debt Rating Affirmed May 08

Standard & Poors, May 2008

Abstract
On May 6, 2008, Standard & Poor's Ratings Services affirmed its 'AAA/Stable/A-1+' senior debt rating on Fannie Mae and placed its 'AA-' risk to the government, preferred stock, and subordinated debt ratings on Fannie Mae on CreditWatch Negative. The CreditWatch Negative placement is due to Fannie Mae's continued weak core earnings and elevated mortgage credit losses. Today Fannie Mae posted an after-tax quarterly loss of $2.2 billion, its third consecutive quarterly loss. At the same time Fannie Mae announced plans to raise $6 billion in new capital, including common equity, and to cut the common dividend beginning with the third quarter to $0.25 per share, providing $390 million of additional capital support annually. The key reasons behind the first-quarter loss...

Companies mentioned in this report are:
- Fannie Mae

Action: Affirmed
Action: On CreditWatch:Negative

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Product Type: Research Update
Research updates complement media releases. They offer more depth and detail than summary analyses by incorporating all information published in the media release. They are more up to date than summaries in that they are published simultaneously with media releases.

- Fannie Mae

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