Fannie Mae 2012 Annual Report Download - page 121

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Table 39 displays the credit ratings issued by the three major credit rating agencies as of March 25, 2013.
Table 39: Fannie Mae Credit Ratings
As of March 25, 2013
S&P Moody’s Fitch
Long-term senior debt . . . . . . . . . . . . . . . . . . . . . . . AA+ Aaa AAA
Short-term senior debt. . . . . . . . . . . . . . . . . . . . . . . A-1+ P-1 F1+
Qualifying subordinated debt . . . . . . . . . . . . . . . . . A Aa2 AA-
Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . C Ca C/RR6
Bank financial strength rating . . . . . . . . . . . . . . . . . — E+ —
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Negative Negative Negative
(for Long Term
Senior Debt and
Qualifying
Subordinated Debt)
(for Long Term
Senior Debt and
Qualifying
Subordinated Debt)
(for AAA rated Long
Term Issuer Default
Rating)
We have no covenants in our existing debt agreements that would be violated by a downgrade in our credit ratings. However,
in connection with certain derivatives counterparties, we could be required to provide additional collateral to or terminate
transactions with certain counterparties in the event that our senior unsecured debt ratings are downgraded. The amount of
additional collateral required depends on the contract and is usually a fixed incremental amount, the market value of the
exposure, or both. See “Note 9, Derivative Instruments” for additional information on collateral we are required to provide to
our derivatives counterparties in the event of downgrades in our credit ratings.
Cash Flows
Year Ended December 31, 2012. Cash and cash equivalents increased from December 31, 2011 by $3.6 billion to $21.1
billion as of December 31, 2012. Net cash generated from investing activities totaled $527.7 billion, resulting primarily from
proceeds received from repayments of loans held for investment. Net cash from operating activities totaled $37.0 billion.
These net cash inflows were largely offset by net cash used in financing activities of $561.1 billion primarily attributable to a
significant amount of debt redemptions in excess of proceeds received from the issuances of debt.
Year Ended December 31, 2011. Cash and cash equivalents increased from December 31, 2010 by $242 million to $17.5
billion as of December 31, 2011. Net cash generated from investing activities totaled $464.4 billion, resulting primarily from
proceeds received from repayments of loans held for investment. These net cash inflows were offset by net cash used in
operating activities of $15.2 billion and net cash used in financing activities of $448.9 billion primarily attributable to a
significant amount of debt redemptions in excess of proceeds received from the issuances of debt as well as proceeds
received from Treasury under the senior preferred stock purchase agreement.
Capital Management
Regulatory Capital
FHFA has announced that during the conservatorship, our existing statutory and FHFA-directed regulatory capital
requirements will not be binding and FHFA will not issue quarterly capital classifications. We submit capital reports to FHFA
during the conservatorship and FHFA monitors our capital levels. We report our minimum capital requirement, core capital
and GAAP net worth in our periodic reports on Form 10-Q and Form 10-K, and FHFA also reports them on its website.
FHFA is not reporting our critical, risk-based capital or subordinated debt levels during the conservatorship. For information
on our minimum capital requirements see “Note 15, Regulatory Capital Requirements.”
Capital Activity
We are effectively unable to raise equity capital from private sources at this time and, therefore, are reliant on the funding
available under the senior preferred stock purchase agreement to address any net worth deficit.
Senior Preferred Stock Purchase Agreement
Under the senior preferred stock purchase agreement, Treasury made a commitment to provide funding, under certain
conditions, to eliminate deficiencies in our net worth. We have received a total of $116.1 billion from Treasury pursuant to
the senior preferred stock purchase agreement as of December 31, 2012. The aggregate liquidation preference of the senior
preferred stock, including the initial aggregate liquidation preference of $1.0 billion, remains at $117.1 billion.