Neither Fannie Mae's and Freddie Mac's political troubles nor their growing engagement in riskier businesses have prompted Moody's Investors Service to lower its ratings for the two.

In a teleconference with investors last month, Moody's said it is maintaining its senior debt rating for both government-sponsored enterprises at Aaa and its outlook for them as "stable."

In a research report issued Monday, the rating agency called Fannie and Freddie "well-run, world-class financial institutions with sound business profiles and substantial franchise values," adding that "these characteristics provide enduring credit support."

Though acknowledging Fannie's and Freddie's political problems, Moody's said they are adept at managing risk and therefore represent a sound investment.

The report poured cold water on a couple of issues that have flared up in recent months, when Moody's said that the two enterprises' entry into higher risk loans was not dangerous, and that they can buy their own mortgage-backed securities without crippling their ability to manage risk.

Fannie and Freddie's effort to maintain profit margins by purchasing high-loan-to-value and other risky loans prompted some investors to worry about credit quality.

Stanislas Rouyer, vice president and senior credit officer at Moody's, said the enterprises "have the competence to understand the risk they are taking through their subprime initiatives" and are entering the new businesses "in a prudent way." The expansion "will represent a small part of their activities," he said.

Moody's added that the enterprises control their heightened exposure through a combination of strong risk analysis and credit enhancements on some of their loans.

Critics have said that Fannie's and Freddie's practice of buying their own mortgage-backed securities could be costly to taxpayers, because the enterprises take on interest rate risk, which they normally would pass on to investors. However, Moody's said that practice is a safe one.

The securities do not create any more risk for the enterprises than the loans they hold in portfolio, Moody's said. The capital that Fannie and Freddie hold on their securities takes into account the added interest risk, the rating agency said, and Moody's is comfortable with their ability to manage interest rate and prepayment risk.

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