And Now, For An Oldie But A Goodie
S&P REVISES NATL RURAL COOP OUTLOOK TO NEG, AFFIRMS 'A/A-1' CCR
Although CFC remains one of the premier lenders to rural utilities, it
still relies heavily on short-term wholesale funding, long-term leverage
has increased significantly, and it is exposed to interest rate risk.
We are revising the outlook to negative from stable, while affirming our
'A/A-1' counterparty credit ratings on the company.
- We could revise the outlook to stable if the company meaningfully reduces
its leverage and dependence on short-term funding.
The outlook is negative.
We believe that CFC's continued high exposure to
short-term wholesale funding, increased leverage, potential credit quality
problems with its limited existing loan loss reserves, and potential exposure
to interest rate movements could lead us to lower the ratings. The outlook
could be reviewed for a revision to stable if management succeeds in reducing
leverage and the company's dependence on short-term funding.
For our thoughts on the matter, please check here.