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New York City HDC - Multi-Fam. Hsg Rev Bds -- Moody's assigns Aa2 to NYC HDC's Multi-Fam Hsg Rev Bonds 2021 Ser A1, 2021 Ser A2, 2021 Ser B; stable outlook

·15 min read

Rating Action: Moody's assigns Aa2 to NYC HDC's Multi-Fam Hsg Rev Bonds 2021 Ser A1, 2021 Ser A2, 2021 Ser B; stable outlookGlobal Credit Research - 18 Feb 2021New York, February 18, 2021 -- Moody's Investors Service has assigned a Aa2 rating to the proposed New York City Housing Development Corporation, NY's (the Corporation's) $167.58 million Multi-Family Housing Revenue Bonds, 2021 Series A-1 (Sustainable Development Bonds), $13.76 million Multi-Family Housing Revenue Bonds, 2021 Series A-2 (AMT) (Sustainable Development Bonds) and $212 million Multi-Family Housing Revenue Bonds, 2021 Series B (Federally Taxable) (Sustainable Development Bonds).Any related subseries created upon pricing of the deal will also carry the Aa2 rating as applicable. In addition, we have affirmed the Aa2 and Aa2/VMIG 1 ratings on all outstanding New York City Housing Development Corporation Multi-Family Housing Revenue Bonds and New York City Housing Development Corporation Multi-Family Housing Revenue Bonds (Federal New Issue Bond Program). We have also affirmed the Aa3 ratings on all outstanding bank bonds under the Multi-Family Housing Revenue Bonds resolution. The outlook is stable.RATINGS RATIONALEThe Aa2 ratings on the new series as well as all outstanding parity bonds with long term underlying ratings are based on the strong financial position of the program and the composition and performance of the mortgage loans securing the bonds. While we expect forbearance requests could increase due to the impact of COVID-19 on renters, the Resolution has a substantial cushion to absorb non-payment of rent.The VMIG 1 ratings on all outstanding bonds with short-term underlying ratings are based on the credit strength of the Multi-Family Housing Revenue Bonds indenture as reflected in its long term rating of Aa2.The VMIG 1 ratings on all outstanding variable rate debt backed by a Standby Bond Purchase Agreement (SBPA) are based on the terms of the applicable SBPA that covers each applicable series of the Bonds, the rating of the SBPA counterparties, and the long term rating of the Multi-Family Housing Revenue Bonds indenture.The Aa3 ratings on all outstanding bank bonds are based on the long-term underlying Aa2 rating of the Multi-Family Housing Revenue Bonds resolution and reflects the subordinate lien pledge for repayment of excess bank bond principal.RATING OUTLOOKThe outlook on the long term underlying ratings and the bank bond ratings is stable. We expect the strong overcollateralization, portfolio performance, and the active issuer management to protect the bond program from potential loan losses.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS-Long term ratings: Further increase in the asset to debt ratio of the program, combined with a permanent shift in the portfolio composition towards more insured and guaranteed loans.-Short term ratings: N/AFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS-Long term ratings: Sharp decline of the financial position of the program or deterioration in the performance of the portfolio as exhibited by substantial delinquencies or foreclosures.- Short term underlying ratings: Downgrade of the long term rating of the program below A3.-Short term enhanced ratings: Downgrade of the long term rating of the program or downgrade of a SBPA counterparty's rating.LEGAL SECURITYThe bonds are special revenue obligations of the issuer on parity with approximately $8.692 billion of outstanding prior bonds (as of December 31, 2020) issued under the Multi-Family Housing Revenue Bonds resolution (the open resolution). The bonds are secured by the multifamily loans in the portfolio, all funds pledged under the resolution and all revenue there from. The 2009 Series 1 and 2 (the NIBP resolutions) were issued as separately secured series and are not on parity with the rest of the bonds outstanding under the open resolution or with each other. The 2009 Series 1 and 2 bonds are secured and payable from all funds and mortgage loans pledged to them under their individual NIBP resolutions. Funds pledged under the NIBP resolutions are not available to the open resolution. However, excess funds in the open resolution may be transferred to the NIBP resolutions to the extent needed and available. The aggregate debt service reserve requirement for the indenture is established on a series by series basis depending on the types of loans financed by the specific series of bonds.USE OF PROCEEDSProceeds of the 2021 Series A-1 and 2021 Series A-2 bonds will be used to redeem bonds. A portion of the proceeds of the 2021 Series B bonds will be used to finance mortgage loans and the remainder is expected to be deposited in the Bond Proceeds Account, or released to the Corporation, to be applied in the future at the direction of the Corporation.METHODOLOGYThe principal methodology used in the long-term underlying ratings was US Housing Finance Agency Multifamily Methodology published in November 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1041931. The principal methodology used in short-term underlying ratings was Short-term Debt of US States, Municipalities and Nonprofits Methodology published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1210749. The principal methodology used in short-term enhanced ratings 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 these methodologies. REGULATORY DISCLOSURESFor 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 ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are 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_1243406.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.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK 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. Rachael McDonald 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 Florence Zeman 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 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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