FCA: Credit rating drop won't affect risk calcuations
August 10, 2011 | 01:03 PM | Filed in: Farm Credit Administration
The Standard & Poor's lowering of the credit ratings of the Farm Credit System from AAA to AA+ will not affect the calculations for risk of the debt issued by those institutions, said Leland Strom, chairman of the Farm Credit Administration, the regulator of the Farm Credit System and the Federal Agricultural Mortgage Corporation (Farmer Mac).
In a news release Tuesday, Strom noted that Standard & Poor’s had lowered the rating of Treasury securities on Friday and of government-related entities including the farm credit institutions on Monday.
“With regard to the actions, the Farm Credit Administration (FCA) provides the following guidance for the institutions of the Farm Credit System: the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change for purposes of calculating risk-based capital,” Strom said.
“The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other FCA regulations will also be unaffected,” he added. “This guidance is consistent with the guidance issued by other federal financial regulatory agencies. We will evaluate any other implications for entities regulated by the FCA and issue additional clarification as necessary.
In a news release Tuesday, Strom noted that Standard & Poor’s had lowered the rating of Treasury securities on Friday and of government-related entities including the farm credit institutions on Monday.
“With regard to the actions, the Farm Credit Administration (FCA) provides the following guidance for the institutions of the Farm Credit System: the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change for purposes of calculating risk-based capital,” Strom said.
“The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other FCA regulations will also be unaffected,” he added. “This guidance is consistent with the guidance issued by other federal financial regulatory agencies. We will evaluate any other implications for entities regulated by the FCA and issue additional clarification as necessary.
