S&P downgrades raft of US finance bodies

Standard & Poor’s has made further rating cuts to the US’s biggest financial institutions following its historic downgrade of the US last Friday.

Standard & Poor’s has downgraded both Freddie Mac and Fannie Mae, the two US government-backed mortgage agencies, to bring them in line with the sovereign rating.

The agency had put the two agencies on negative outlook for a downgrade to AA+ from AAA in July due to their financial dependence on the US government.

It has now lowered their senior issue ratings, but removed them from a negative watch.

“Fannie Mae and Freddie Mac were placed into conservatorship in September 2008 and their ability to fund operations relies heavily on the US government. In addition to the implicit support we factor into our ratings, the US Treasury has demonstrated explicit support by providing these entities with capital quarterly, as necessary,” it said in a statement.

The institutions are the latest to be downgraded after S&P cut the ratings of five US insurance groups and a number of other government-related finance groups.

The ratings of the Depository Trust, National Securities Clearing Corp, Fixed Income Clearing Corp and the Options Clearing Corp - were all cut one notch to AA-plus, while others such as federal home loan banks and FDIC debt issues were also lowered.