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Maine State Housing Auth. - Mtg. Purch.Bds -- Moody's assigns VMIG 1 to Maine St. Hsg. Auth.'s Mort. Purch. Bds., Ser. 2017 D-2

·14 min read

Rating Action: Moody's assigns VMIG 1 to Maine St. Hsg. Auth.'s Mort. Purch. Bds., Ser. 2017 D-2

Global Credit Research - 26 Aug 2020

New York, August 26, 2020 -- Moody's Investors Service has assigned the short term VMIG 1 rating to the Maine State Housing Authority ("MaineHousing," "MSHA," or the "Authority") Mortgage Purchase Bonds, 2017 Series D-2 (Federally Tax-Exempt) (the "Bonds"). Moody's currently maintains a rating of Aa1 with a stable outlook on the long-term debt of the Mortgage Purchase Bond program.

RATINGS RATIONALE

The assignment is based on conversion of the Bonds to a variable rate mode and the addition of a standby bond purchase agreement (the "SBPA") provided by TD Bank, N.A ("TD Bank" or the "Bank"). The conversion is scheduled to take effect on September 1, 2020. The Bank's long and short term counterparty risk assessments are Aa3(cr)/P-1(cr) respectively by Moody's.

The VMIG 1 rating reflects the SBPA provided by the Bank and expires upon the earliest of to occur of (i) the mandatory tender date resulting from the expiration of the SBPA, (ii) conversion of the Bonds to a mode other than weekly, or (iii) earlier termination of the SBPA.

We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action. We do not see any material immediate credit risks for the Agency. However, the situation surrounding COVID-19 is rapidly evolving and the longer term impact will depend on both the severity and duration of the crisis. If our view of the credit quality of the Agency changes, we will update the rating at that time.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

Short term rating: - N/A

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

-Short term rating: Downgrade of the short term counterparty risk assessment of the Bank and/or of the bond program's rating.

LEGAL SECURITY

The Bonds are special obligations of the Maine State Housing Authority. The Bonds will be issued under the General Mortgage Purchase Bond Resolution adopted February 4, 1972 and supplemented with a Series Resolution, which authorizes the issuance of up to $400,000,000 in one or more series.

Variable Rate:

The Bonds will continue to bear interest at the weekly rate mode and interest shall be paid on the fifteenth day of each May and November. The Authority may elect to change the interest rate mode from the weekly rate mode and upon any such mode change, the Bonds are subject to mandatory tender.

The SBPA provides for purchase by the Bank of Bonds that are tendered by bondholders and cannot be remarketed. Under certain circumstances the Bank can terminate the applicable SBPA or suspend its obligations without notice and will therefore not be obligated to provide funds. These circumstances include any of the following: (1) any principal of or interest on any Bond (including Bonds purchased by the Bank) is not paid when due; (2) certain acts of bankruptcy or insolvency by or involving the Authority; (3) provisions relating to the payment of principal or interest under the SBPA, the Bonds, the General Resolution, the Series Resolution, the Series Certificate, or any Parity Debt cease to be valid, binding or fully enforceable on the Authority as determined by a court or governmental agency having appropriate jurisdiction in a final non-appealable judgment; (4) a final non-appealable judgment in excess of $5,000,000; or (5) the rating on the Bonds falls below Baa3.

Other events of termination become effective only after the Bank provides sufficient notice to allow for a mandatory tender of Bonds before any termination date of the SBPA.

PROFILE

MaineHousing has established a Mortgage Purchase Program, pursuant to which it is authorized to make loans on single-family (one to four units) or multi-family (more than four units) housing or purchase such loans from banks, life insurance companies, savings and loan associations, mortgage companies, other financial institutions lawfully doing business in the State and the Federal government for the purpose of providing housing for persons and families of low income.

MaineHousing is empowered to, among other things, issue bonds and notes for the purpose of making or providing monies for purchasing mortgages under its Mortgage Purchase Program and for depositing the required amounts in the Housing Reserve Fund.

METHODOLOGY

The principal methodology used in this rating was Variable Rate Instruments Supported by Conditional Liquidity Facilities published in March 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1057134. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The rating has been disclosed to the rated entity or its designated agent (s) and issued with no amendment resulting from that disclosure.

This rating is solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

David Parsons Lead Analyst Housing Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Ferdinand Perrault Additional Contact Housing JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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