Moody's Investors Service placed the Federal Home Loan Bank of Chicago's subordinated debt on review Monday for a possible downgrade.

Analysts have expressed concern that the Chicago bank might be unable to make interest payments if its regulatory capital slips below required levels. Capital levels at the bank — and several other Home Loan banks — could take a hit from souring mortgage investments when fourth-quarter results are released next month.

Still, Moody's said there is a low risk that the Chicago bank would be unable to make its debt payments, because the government-sponsored enterprise has flexibility in managing its balance sheet and could face an easier capital requirement from its regulator. The rating agency noted that Fannie Mae and Freddie Mac have been able to make their debt payments even though their capital is below required minimums.

The Chicago bank's subordinated debt is currently rated Aa2.

Moody's affirmed the Aaa senior debt and Prime-1 ratings of the Home Loan Bank System as a whole and said the outlook was stable.

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