Fitch Places National Rural on Rating Watch Negative

NEW YORK--(Business Wire)--
Fitch Ratings has placed the ratings of National Rural Utilities Cooperative
Finance Corp (NRN), including the 'A' long-term Issuer Default Rating (IDR) and
the 'F1' short-term IDR, on Rating Watch Negative. Approximately $17 billion of
debt is affected by this action. A complete list of ratings is provided at the
end of this release.

Today's action reflects Fitch's view that NRN's funding profile has migrated
towards a higher reliance on secured funding and leverage levels remain elevated
relative to historical measures. Fitch estimates that, as of Feb. 28, 2009, 51%
of NRN's total debt is secured, when including Rural Electric Development Loan
and Guarantee program (REDLG) bonds as secured based on rating triggers imbedded
in these instruments, compared to a historical average of about 35%. Fitch
believes this shift in the funding profile has occurred because of the relative
cost differences between secured and unsecured sources. Nonetheless, Fitch's
concern is that greater reliance on secured sources could be detrimental to
unsecured creditors over time if the balance sheet becomes more encumbered.
Further, NRN faces meaningful debt maturities in the near term, including $1.2
billion in August 2009. In addition, the company's leverage has risen gradually
over the past few years. Fitch recognizes the efforts NRN has taken action
recently to reverse this trend through issuance of hybrid forms of capital,
however, Fitch will evaluate NRN's longer term capital targets and ability to
achieve these. Partially offsetting these concerns are NRN's solid asset
quality, consistent operating performance and vital role in supplementing the
credit programs of the U.S. Department of Agriculture's Rural Utilities Service
by funding rural utility cooperatives.

Fitch expects to resolve the Rating Watch Negative in the very near term
following a review, with particular focus on NRN's longer range funding and
capitalization plans.

NRN is a not-for-profit cooperative association which focuses exclusively on
providing capital to the rural utility cooperative industry. The company has
approximately $20.9 billion in assets and $439.3 million in member equity.

Fitch has placed the following ratings Rating Watch Negative:

National Rural Utilities Finance Corp.

--Long-term IDR 'A';

--Short-term IDR 'F1';

--Senior secured 'A+';

--Senior debt 'A';

--Preferred stock 'A-';

--Short-term debt 'F1'.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Vincent Arscott, CFA +1-212-908-0872
Christopher Wolfe, +1-312-368-2063 (New York)
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com

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