S&P Downgrades Include Farm Credit

Along with the U.S. Sovereign debt, S&P has downgraded senior debt issues by the Farm Credit System. Issuer credit ratings on the four System Banks is unchanged. My thanks to Santa Maria real estate appraiser Dave Hamel for tipping me off to this.

This is what the S&P statement had to say about Farm Credit

“The downgrade of the senior debt issued by the Farm Credit System reflects a
one-notch reduction in the U.S. sovereign rating.

“Under our GRE criteria, the Farm Credit System is classified as having a very high
likelihood of receiving support from the government if needed. The Farm
Credit System’s stand-alone credit profile is ‘aa’.

“Thus, under our criteria, the notches of uplift that we factor into
the ratings on debt issued by the System decrease to one notch
from two notches when the sovereign has a ‘AA+’ rating rather than a ‘AAA’ rating.

“The issuer credit ratings on the four Farm Credit System Banks that we
ate are unaffected by the downgrade of the U.S. sovereign given their ‘a+’
stand-alone credit ratings and high likelihood of support classification under
our GRE criteria.

“The implicit government support that we factor into our ratings for the
Farm Credit System debt and the four rated banks considers the system’s
mission to provide stable and reliable funding to the U.S. agricultural and
rural sectors.”