S&P Global Ratings Issues Downgrade and Revised Outlook on CFC


March 5, 2021

Ling Wang
Banking & Investor Relations, 800-424-2954
Brad CaptainCorporate Relations, 800-424-2954

“We are disappointed in S&P’s decision, which is based largely on speculation related to the future of Texas energy markets.” — CFC CFO J. Andrew Don

DULLES, Va.—The National Rural Utilities Cooperative Finance Corporation (CFC) announced that S&P Global Ratings (S&P) issued a downgrade on the organization’s secured and unsecured debt, while revising its outlook to “negative” based on the potential for elevated credit stress posed by electric utilities operating in Texas following last month’s winter storm that resulted in blackouts and unprecedented power costs throughout the state.

Based on CFC’s lending to rural electric cooperatives in Texas, which amounts to 15 percent of its outstanding loans, S&P downgraded the organization’s long-term issuer credit, senior secured and senior unsecured debt ratings to “A-“ from “A,” subordinated debt rating to “BBB” from “BBB+” and short-term issuer credit and commercial paper ratings to “A-2” from “A-1.” The outlook is now negative.

“We are disappointed in S&P’s decision, which is based largely on speculation related to the future of Texas energy markets,” said CFC Senior Vice President and CFO J. Andrew Don. “CFC’s financial and market performance has been strong over the years.”

S&P itself noted the strength of CFC’s underwriting and historical loss experience and further highlighted its belief that the organization has adequate funding and liquidity: “Our ratings on CFC reflect in our view, its unique business position in financing its rural electric utility members, adequate capitalization, historically strong asset quality, adequate funding and liquidity, as well as access to funding from the Federal Financing Bank, Farmer Mac and member subordinated debt, which is subordinate to all other debt issues.”

“CFC remains strong and well capitalized,” said CFC CEO Sheldon Petersen.

He added: “The fact that electric cooperatives continue to distribute power to their members, despite the aftermath of last month’s storms, demonstrates the resilience of the consumer-focused electric cooperative business model and their ability to provide safe, reliable and sustainable power.”

About CFC

Created and owned by America’s electric cooperative network, the National Rural Utilities Cooperative Finance Corporation (CFC)—a nonprofit finance cooperative with more than $28 billion in assets—provides unparalleled industry expertise, flexibility and responsiveness to serve the needs of our member-owners. CFC is an equal opportunity provider. Visit us online at www.nrucfc.coop.