Freddie Mac

This report does not constitute a rating action. Overview Key strengths Key risks Critical role in implementing U.S. government housing policy. Substantial uncertainties regarding the probability, timing, and scenario under which it can exit conservatorship. Integral link to U.S. government. Significant undercapitalization and will take several years to build capital toward regulatory requirements. Dominant position as a secondary-market liquidity provider to the U.S. residential mortgage market. Monoline exposure to the U.S. mortgage market. Significant improvements in risk management since entering conservatorship. In S&P Global Ratings' view, Freddie Mac has an integral link to the government and a critical role in carrying out U.S. housing policy. Our view is supported by past government actions, especially during economic uncertainty, which included providing

...Our ratings on Freddie Mac's senior unsecured debt are in line with our ratings on U.S. government debt because we believe the government would almost certainly provide extraordinary support if needed. In S&P Global Ratings' view, Freddie Mac has an integral link to the government and a critical role in carrying out U.S. housing policy. Our view is supported by past government actions, especially during economic uncertainty, which included providing additional liquidity, mortgage forbearance by Congress, and the purchase of residential mortgage-backed securities by the Federal Reserve. The absence of Freddie Mac (and close peer Fannie Mae) would likely create major reverberations for the U.S. housing market. Our base-case scenario is that any developments toward exiting conservatorship will not reduce the likelihood that the current senior obligations of Freddie Mac (and Fannie Mae) will be met. That view underpins our '##+/A-1+' ratings on their senior notes, which remain on a stable outlook....

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