The 'A+/A-1+' rating on Mason County, Ky.'s bonds, issued for East Kentucky Power Cooperative and backed by the National Rural Utilities Cooperative Finance Corp.'s (CFC), reflects the following risks: Impairment in CFC's largest credit exposure--CFC has disclosed that loans to its largest borrower (CoServ) are impaired at an estimated $105 million. The final amount of the impairment is not known because it is dependent on the near-term market conditions. CFC has reserved against this level of impairment and other potential risks in its portfolio with a loan loss allowance, currently at $286 million; however, significant further impairment on the CoServ loan or potential material erosion in asset quality elsewhere in CFC's portfolio may place pressure on CFC's ability to maintain
