S&P move falls flat
Ag credit agency sees little impact from downgrade
By MATEUSZ PERKOWSKI
Capital Press
A recent downgrade to the Farm Credit System's credit rating should drive up interest rates for its ag lenders and their customers.
So far, that hasn't happened.
"We're seeing the exact reverse of what we think the long-term effects might be," said Bill Dunn, policy analyst for the Farm Credit Administration, which regulates the network of system lenders.
The Farm Credit System had its top-notch rating of AAA lowered a peg to AA+ by the Standard & Poor's rating service on Aug. 8.
The move came three days after S&P similarly reduced the U.S. government's sovereign rating due to the nation's mounting debt burden.
Such downgrades should theoretically result in higher interest rates on loans as investors lower their confidence in debt securities issued by the U.S. Treasury and the Farm Credit System, financial experts say.
That's because these institutions would need to offer higher yields on their bonds as a way to attract reluctant investors. Those higher rates would then be passed on to borrowers.
Since the downgrades, however, the interest rates on such debt securities have stayed the same or fallen, experts say.
The impact of the credit downgrade has essentially been overwhelmed by investor fears about financial instability in several European countries and the stagnating economy in the U.S., said Dunn.
In other words, U.S. debt securities still look relatively stable compared to the unpredictable global outlook. Demand from investors hasn't fallen, so interest rates haven't had to rise.
"There's a lot of money that's eager to find the very safest haven," Dunn said. "They don't really care about what yields they get. They want safety, safety, safety."
Though the downgrade hasn't immediately harmed the Farm Credit System -- which has about $174 billion in outstanding agricultural loans -- it has cast a shadow on the future.
Northwest Farm Credit Services - News
Northwest Farm Credit Services, of Spokane, says it had second-quarter net income of $29.4 million, down from $34.1 million in the year-earlier quarter. For the first six months of 2011, the federally chartered ag lender reported total
I got a report from Northwest Farm credit services and the headline said crop outlook positive after cool wet spring. That certainly sounds good for Idaho ag producers so I called up Michael Stolp to get the lowdown. Talk about an articulate guy.
The Farm Credit System is more independent than other government-sponsored enterprises, whose loans are directly backed up by the US Treasury, said Tom Nakano, chief financial officer of Northwest Farm Credit Services, an association within the network
On June 30, Northwest Farm Credit Services reported that Washington and Oregon experienced their third and fifth coldest “March through May” reporting periods, respectively, on record. The agency also reported that the fresh market and processors “are
Weather has been a key concern this year for agricultural producers, but after a cool, wet spring, many industries are expecting high yields from later-than-usual harvests, according to the Northwest Farm Credit Services' Knowledge Center Market
Northwest Farm Credit Services – Ag Globe Trotter - DW Block ...
“Another factor identified by lenders that every producer reading this column should know is that reviewers, auditors, and examiners at the state and federal levels have been pressuring lenders to downgrade credits in certain commodities and regions. As a result of this, producers will be required to provide validated financial information and will be expected to have an executable plan.”
Via Northwest Farm Credit Services – Ag Globe Trotter – Weekly Edition .
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Northwest Farm Credit Services, the Northwest's largest agricultural lending cooperative, ... Northwest Farm Credit Services, the Northwest's largest agricultural ...
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Northwest Farm Credit Services is a customer-owned, financial services cooperative ... Northwest Farm Credit Services is part of the 90-year-old Farm Credit System. ...
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Northwest Farm Credit Services, ACA Contact Information Northwest Farm Credit Services, ACA 1700 S. Assembly St