NEW YORK--(BUSINESS WIRE)--
Fitch Ratings assigns a long-term rating on the following Maryland CDA (MCDA) Housing Revenue Bonds:
--$10.925 million MCDA Housing Revenue Bonds, 2013 Series A 'AA+'.
Additionally, Fitch affirms approximately $188.5 million in housing revenue bonds (a full list of ratings follows at the end of this release) of the approximate $389.1 million of total parity debt outstanding under the resolution. The difference in outstanding bond amount of Fitch rated debt and total debt outstanding under the resolution is from debt obligations which Fitch was not asked to provide a rating.
The Rating Outlook for the bonds is Stable.
The trust indenture pledges all the mortgages in the loan portfolio consisting of multifamily, single family and group homes as well as the funds pledged under the legal provisions of the resolution.
KEY RATING DRIVERS
PORTFOLIO FEDERALLY INSURED: As of Sept. 30, 2012, approximately 97% of the multifamily portfolio is partially or fully insured by the Federally-backed entities: Ginnie Mae, Fannie Mae, Freddie Mac, and FHA risk-share.
SUFFICIENT OVER-COLLATERALIZATION: On a cash flow basis, the assets under the resolution show a minimum asset parity ratio of 108% although MCDA has the right to withdraw excess assets. However, by practice, MCDA continues to leave sufficient over-collateralization in the indenture.
CAPABLE MANAGEMENT OVERSIGHT: MCDA has demonstrated strong programmatic oversight capabilities and has had a long successful history of administering multifamily programs.
INDENTURE CONSIDERATIONS: The rating is constrained by the issuer's ability to withdraw excess funds and to include various types of loans other than first lien mortgages.
The 2013 series A bonds are the 42nd series of bonds to be sold under a general bond resolution adopted on Nov. 1, 1996 and are on parity with all bonds issued previously under the indenture. The 2013 series A bonds will be used to finance in part the development known as Parkview Towers and have credit enhancement under the FHA risk-share program whereby providing a 50/50 split on the risk of the project.
The portfolio mainly consists of 60 multifamily residential developments which, as of September 30, 2012, had an aggregate outstanding mortgage balance of $377.4 million. Additionally, the portfolio consists of single-family residences and group homes which account for $8.6 million in loans. As of Sept. 30, 2012, 97% of the portfolio was insured by a governmental entity such as: Ginnie Mae (79.9%), Fannie Mae (6.2%), Freddie Mac (0.8%), and FHA risk-share (10.5%) providing a 50/50 split on project risk. All of these entities are backed by the U.S. Government which is currently rated 'AAA' with a Negative Outlook by Fitch. In addition, the Maryland Housing Fund insures 1.6% of the loan portfolio while 0.4% remains uninsured.
More than 38% of the multifamily units in the portfolio receive rental assistance payments under Section 8 of the U.S. Housing Act of 1937 or interest-rate subsidies under Section 236 of the National Housing Act. The remaining 62% of the units do not receive rental or interest-rate subsidies.
Credit concerns are related to the bond resolution allowing various types of loans including uninsured and second lien mortgages. These concerns are mitigated by the current loan portfolio being 97% insured by a government entity, management demonstrating strong programmatic oversight, and the consistent strong performance of the portfolio.
Additionally, Fitch affirms the following ratings:
--$53.8 million MCDA Housing Revenue Bonds, 2004 Series B, C, & D at 'AA+';
--$36.1 million MCDA Housing Revenue Bonds, 2005 Series A, B, & C at 'AA+';
--$18.3 million MCDA Housing Revenue Bonds, 2006 Series A, B, C, & D at 'AA+';
--$26.8 million MCDA Housing Revenue Bonds, 2007 Series A, B, & C at 'AA+';
--$26.7 million MCDA Housing Revenue Bonds, 2008 Series A, B, C, & D at 'AA+';
--$7.4 million MCDA Housing Revenue Bonds, 2009 Series A at 'AA+';
--$19.5 million MCDA Housing Revenue Bonds, 2012 Series A, B, & D at 'AA+.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Rating Criteria for Pooled Multifamily Housing Bonds', (Dec 20, 2012);
--'Revenue-Supported Rating Criteria', (June 12, 2012).
Applicable Criteria and Related Research:
Rating Criteria for Pooled Multifamily Housing Bonds
Revenue-Supported Rating Criteria
- Security Upgrades & Downgrades
- Revenue Bonds
Charles Giordano, +1-212-908-0607
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Kasia Reed, +1-212-908-0500
Maura McGuigan, +1-212-908-0591
Elizabeth Fogerty, New York, +1 212-908-0526