Fitch Ratings has assigned a 'AA+' rating to the following
--
The Rating Outlook is Stable.
RATING ACTIONS
Entity / Debt
Rating
Prior
LT
AA+
Affirmed
AA+
Page
of 1
VIEW ADDITIONAL RATING DETAILS
The 'AA+' rating reflects the strong asset quality of the program given the MBS portfolio. As government sponsored entities (GSEs),
The rating also reflects the program's strong financial and cash flow asset parity ratios. As of the fiscal 2022 audit (
Under Fitch's stress scenarios, the program maintains a minimum cash flow asset parity of approximately 107% for the life of the bonds. Fitch will continue to monitor the degree to which down payment assistance (DPA) funding, either as grants or second loans, affects net operating income and the program asset parity.
SECURITY
The bonds are secured by: MBS guaranteed by
KEY RATING DRIVERS
Asset Quality - 'Strong' - The Indenture assets primarily consist of MBS, for which the GSEs guarantee the full and timely payment of principal and interest regardless of actual performance of the underlying loans. The assets also include cash and investment securities of sufficient credit quality to support the rating.
Mortgages permitted to be placed into MBS must be fully documented and follow strict underwriting requirements to qualify. As of
Cash Flow Asset Parity - 'Strong' - The rating also reflects the program's high, albeit declining, levels of cash flow asset parity. After incorporating Fitch's stress assumptions, which include interest rate stresses, loan origination stresses, prepayment stresses and increased fees upon liquidity renewal, the program maintains a cash flow asset parity position above 107% for the life of the bonds. This compares with cash flow asset parity of approximately 115%, with similar stresses, one year prior and 128% two years prior.
The decline in cash flow asset parity reflects an increase in bond-financed DPA second mortgages, which are pledged to the Indenture, but excluded as program assets in the stressed cash flows. The DPA loans totaled approximately
Financial Resources and Program Structure - 'Strong' - The program's financial asset-parity ratio was 115% as of fiscal 2022, a decline from 133% in fiscal 2021, though the decline in net position was primarily a result of a
The legal provisions allow surplus funds in excess of 103% to be withdrawn from the Indenture. However, historically, management has not withdrawn substantial amounts from the Indenture's surplus funds and has maintained high asset parity ratios in the Indenture.
Asymmetric Risk - 'Neutral' -The Indenture is neutral to any asymmetric risks that would constrain the rating.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Given that the program is primarily supported by MBS, any negative rating action on the
Should Fitch's view of the
Continued increases in the origination of DPA second loans and/or transfers out of the program such that the stressed cash flow asset parity falls below 102% when including a full loss on the DPA loans.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Given that the program is primarily supported by MBS, a positive rating action on the
Fitch does not currently have data to support a loan-by-loan review of IHCDA's underlying loan data and performance history for the single-family mortgage revenue bond program; however, if such data is received and analyzed, Fitch could determine that it supports a rating and/or outlook that is not linked to the rating of the GSEs.
PROFILE
The authority was established in 1978 as a public body corporate and politic of the state of
The 2024 series B bonds are being issued: (i) with respect to a portion of the 2024 Series B-1 ad B-2 bonds, to refund certain outstanding debt of the Authority in order to make funds available which will be used, together with the remaining proceeds of the 2024 Series B Bonds to finance single-family mortgage loans through the purchase of MBS; and (ii) to provide approximately
The 2024 series B bonds are being issued on parity with the Indenture's outstanding debt. As of
The authority is issuing the 2024 series B bonds as Social Bonds based on the intended use of proceeds to finance mortgage loans and to fund DPA loans to first-time homebuyers of low and moderate income throughout the state.
For additional information regarding the
Date of Relevant Committee
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The rating is linked to the ratings of
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
Additional information is available on www.fitchratings.com
(C) 2024 Electronic News Publishing, source