Fitch Affirms Fannie Mae's Ratings; Outlook Stable

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NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the long-term Issuer Default Ratings (IDR), senior debt ratings and short-term IDRs of Fannie Mae (Fannie) at 'AAA' and 'F1+', respectively. In addition, Fannie's Support Rating of '1' and Support Floor of 'AAA' have also been affirmed. The Rating Outlook remains Stable. A full list of rating actions follows at the end of this release.

Fannie's 'AAA/F1+' senior debt ratings, along with its 'AA-' subordinated debt ratings, are indicative of strong U.S. government support. Fitch currently has a sovereign credit rating of 'AAA/F1+', with a Stable Outlook on the U.S. federal government. As of Sept. 30, 2010, the U.S. Treasury has made capital injections totalling $85.1 billion into Fannie since it was placed into conservatorship in September 2008. In addition, the Federal Reserve held $1.1 trillion of Agency mortgage backed securities (MBS) and $154.1 billion of direct debt issued by government-sponsored enterprises (GSEs) as of Sept. 30, 2010.

The GSEs continue to play a pivotal role in the federal government's plan to support the housing market. Through the first nine months of 2010, Fannie was the largest issuer of mortgage-related securities in the secondary market, with an estimated market share of new single family mortgage-related securities of approximately 45%. The GSEs have played leadership roles in implementing and maintaining the government's Making Home Affordable plan as well as other important initiatives. Therefore, Fitch believes that government support will remain unquestioned while the GSEs are in conservatorship and a clear exit strategy has not been articulated. Fannie's ratings or Outlook could be negatively affected if Fitch were to lower its ratings or Outlook on the U.S. government or if Fitch believes the future level of government support for Fannie will change.

Fitch has also affirmed Fannie's preferred stock ratings at 'C/RR6', reflecting the ongoing deferral of payments and very low prospects for recovery.

Fitch has affirmed the following ratings with a Stable Outlook:

Fannie Mae

--Long-term IDR at 'AAA';

--Senior unsecured at 'AAA';

--Short-term IDR at 'F1+';

--Short-term debt at 'F1+';

--Subordinated debt at 'AA-';

--Preferred stock at 'C/RR6';

--Support rating at '1';

--Support floor at 'AAA'.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 16, 2010);

--'Short-Term Ratings for Corporate Finance' (Nov. 2, 2010);

--'Recovery Ratings for Financial Institutions', (Dec. 30, 2009).

Applicable Criteria and Related Research:

Short-Term Ratings for Corporate Finance

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=568726

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685

Recovery Ratings for Financial Institutions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493330

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