Freddie Mac's credit losses may surpass its historic high, if the U.S. mortgage market deteriorates more than what is forecast by the No. 2 mortgage finance company, Moody's Investors Service said.

Such a spike in credit losses at the government-sponsored enterprise, which reported a $2 billion quarterly loss earlier this week, could result in Moody's downgrading the ratings on Freddie Mac's bank financial strength, subordinated debt and preferred stock ratings, the debt rating agency said in a statement dated Thursday.

Freddie Mac expects credit losses stemming from its subprime mortgage exposure to rise through at least 2009, equaling 11 basis points of its credit guarantee portfolio, which was the historic high in credit losses for the GSE, Moody's said.

In Moody's view, continued deterioration in the mortgage market, resulting in further decline in these books may lead to credit losses in excess of their 11 basis point loss forecast, Moody's said.

On September 30, Freddie Mac reported total assets of $792.9 billion and guaranteed securities totaling $1.3 trillion.

Moody's revised outlook on these ratings on Freddie Mac, followed similar moves by Fitch Ratings and Standard & Poor's.

For now, Moody's said it affirmed the credit ratings on Freddie Mac including the all-important Aaa senior debt rating, which is vital for investors to gauge the company's default risk.