Fitch Affirms Alaska HFC Mortgage Revenue Bonds at 'AAA'; Outlook Stable

Business Wire

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings affirms the long-term ratings on the following Alaska Housing Finance Corporation (AHFC or the corporation) mortgage revenue bonds:

--$174 million mortgage revenue bonds, 2009 series A-1 & A-2 at 'AAA';

--$71.3 million mortgage revenue bonds, 2010 series A & B at 'AAA';

--$86.9 million mortgage revenue bonds, 2011 series A & B at 'AAA'.

The Rating Outlook on the bonds is Stable.

SECURITY

The security for the bonds is primarily the program obligations of mortgage loans, investments, reserves, and revenues of the program. Additionally, the bonds have credit support from AHFC's special reserve fund and are general obligations of AHFC (rated 'AA+', Stable Outlook).

KEY RATING DRIVERS

SUFFICIENT PROGRAM OVER-COLLATERALIZATION: As of June 30, 2013, the program had over-collateralization of 115%.

STRONG LOAN PORTFOLIO: The loan portfolio is 58% federally insured by the following insurance providers: FHA (27%), RD (15%), HUD (10%), and VA (6%). Additionally, the loan portfolio is performing adequately, with a 60+ delinquency rate of 2.3%.

MANAGEMENT OVERSIGHT: AHFC has a well-tenured management staff with a successful history of administering single-family programs.

GEOGRAPHIC CONCENTRATION: Approximately 65% of the loan portfolio lies in the three locations of: Anchorage (38%), Wasilla/Palmer (17%), and Fairbanks (11%).

OIL DEPENDENCY: The Alaskan economy is heavily dependent on the oil industry.

RATING SENSITIVITY

UNANTICIPATED LOAN LOSSES: Although remote given the strong presence of federal insurance and current performance of the loan portfolio, any unanticipated loan losses could deteriorate over-collateralization levels and put negative pressure on the program.

BANKRUPTCY REMOTE: Fitch considers AHFC to be bankruptcy remote based on its limited public purpose, predominantly limited recourse debt and its inability under current law to commence a voluntary proceeding under Chapter 9 without legislative or executive action. A change in this status could lead to a change to the rating and constrain it to that of the authority's general obligation pledge rating.

CREDIT PROFILE

The 'AAA' rating on the bonds reflects the adequate over-collateralization on the bonds, the strong performance of the loan portfolio, and the presence of federal insurance on the loan portfolio. As of Sept. 30, 2013, the loan portfolio is performing adequately with a 60+ delinquency rate of only 2.3%. The loan portfolio is insured by the following providers: FHA (27%), RD (15%), HUD (10%), and VA (6%). Additionally, 9% of the portfolio is insured by various primary mortgage insurers and the remaining 32% is uninsured. According to indenture provisions, only mortgages with a loan to value of 80% or lower are allowed to be uninsured which mitigates concerns over potential loan losses from the uninsured portion of the loan portfolio. Credit concerns stem from the geographic concentration of the loan portfolio and Alaska's dependency on the oil industry; however, these concerns are largely mitigated through the program's over-collateralization levels and strength of the underlying loan portfolio.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'State Housing Finance Agencies: Single-Family Mortgage Program Rating Criteria', (July 25, 2013);

--'Revenue-Supported Rating Criteria', (June 03, 2013).

Applicable Criteria and Related Research:

State Housing Finance Agencies: Single-Family Mortgage Program Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=712476

Revenue-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709499

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=804686

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Contact:
Fitch Ratings
Primary Analyst
Ryan J. Pami, +1-212-908-0803
Analyst
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Charles Giordano, +1-212-908-0607
Senior Director
or
Committee Chairperson
Maura McGuigan, +1-212-908-0591
Senior Director
or
Media Relations
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

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