NCUA Hit With S&P Downgrades
Caught in an avalanche of downgrades issued by Standard & Poor’s, the large and influential rating service, is the National Credit Union Administration which in the sweeping downgrade of U.S. government issues also saw four of its issues downgraded.
Wrote S & P: “We have...lowered the ratings on...four National Credit Union Association-guaranteed debt issues from two corporate credit unions under the Temporary Corporate Credit Union Guarantee Program (TCCUGP) to 'AA+' from 'AAA'. The downgrades on the TLGP and TCCUGP issues reflect their direct credit support from the U.S. Treasury for timely and ultimate repayment.”
In the short-term, said experts asked about the S&P rating, this will mean NCUA will have to pay higher interest rates to entice buyers to accept what S&P now indicates comes with higher risk.
NCUA was not singled out by S&P. In the same document, FDIC, the Farm Credit System, the Federal Home Loan Bank, Fannie Mae and Freddie Mac all suffered similar downgrades of paper from AAA to AA.
S & P explained its move this way: “On Aug. 5, 2011, Standard & Poor's lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'.As a result, we have also lowered the long-term issuer credit ratings and related issue ratings on select government-related entities (GREs) to 'AA+' from 'AAA'.”