“GSE MBS (a government-sponsored enterprise mortgage-backed security) is not rated by the rating agencies (their debt is). So there would be no official downgrade of GSE MBS,” according to a KBW research note. “Given that the MBS is collateralized but government debt isn’t, the market wouldn’t downgrade MBS similarly because they wouldn’t miss any payments, at least for some time.”
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Max Chen contributed to this article.