Despite Freddie Mac’s recent accounting and management woes, Moody’s is confident in Freddie Mac’s risk management capabilities and overall financial strength. While Moody’s was "disappointed" to learn about Freddie Mac’s troubles, the ratings agency credits Freddie Mac’s "exceptional business franchise" and strong creditworthiness.
"Moody’s confirmations with stable outlooks of Freddie Mac’s securities ratings are based on the belief that Freddie Mac’s core credit strengths have not been fundamentally impaired by the firm’s recent management changes, and related accounting and control matters," says John Kriz, managing director of Moody’s Real Estate Finance team.
Central to Moody’s rating of Freddie Mac’s securities are its U.S government charter and status as a Government Sponsored Entity (GSE), along with its firmly established leadership position in the vital U.S housing finance market. Freddie Mac also benefits from its conservative credit and interest rate risk management practices and appetite, as well as from a sound capital base and liquid balance sheet. The GSE also has a low operating risk profile and world-class business franchise.
"We believe that the new management team and Freddie Mac’s board will be singularly focused in its accounting policies and related controls, as well as in the risk management areas in which Freddie Mac has traditionally excelled," adds Kriz.