Fannie Mae Connecticut Avenue Securities Trust 2019-R03 Notes Assigned Preliminary Ratings

  • Connecticut Avenue Securities Trust 2019-R03's note issuance is an RMBS transaction in which the payments are determined by a reference pool of residential mortgage loans, deeds of trust, or similar security instruments encumbering mortgaged properties acquired by Fannie Mae.
  • We assigned our preliminary ratings to the notes.
  • The preliminary ratings reflect our view of the transaction's credit enhancement, credit quality of the collateral, among other factors.
NEW YORK (S&P Global Ratings) April 5, 2019--S&P Global Ratings today assigned 
its preliminary ratings to Connecticut Avenue Securities Trust 2019-R03's (CAS 
2019-R03's) notes (see list).

The note issuance is an residential mortgage-backed securities (RMBS) 
transaction in which the payments are determined by a reference pool of fully 
amortizing, first-lien, fixed-rate residential mortgage loans secured by one- 
to four-family residences, planned-unit developments, condominiums, 
cooperatives, and manufactured housing to mostly prime borrowers.

The preliminary ratings are based on information as of April 5, 2019. 
Subsequent information may result in the assignment of final ratings that 
differ from the preliminary ratings.

The preliminary ratings reflect: 
  • The credit enhancement provided by the subordinated reference tranches and the associated structural deal mechanics;
  • The credit quality of the collateral included in the reference pool;
  • A REMIC structure that reduces the counterparty exposure to Fannie Mae for periodic principal and interest payments but, at the same time, pledges the support of Fannie Mae (a highly rated counterparty) to cover shortfalls, if any, on interest payments and to make up for any investment losses;
  • The issuer's aggregation experience and the alignment of interests between the issuer and the noteholders in the deal's performance, which, in our view, enhances the notes' strength; and
  • The enhanced credit risk management and quality control processes Fannie Mae uses in conjunction with the underlying representations and warranties framework.
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