Fitch Ratings upgrades and affirms various Idaho Housing and Finance Association's (IHFA) series 1996D-2000E single-indenture senior, mezzanine, and subordinate bonds. Each series is separately secured. Additionally, as detailed in the special report 'State HFA Outlook for 2009' (dated May 4, 2009, available on Fitch's web site at 'www.fitchratings.com'), Fitch is now assigning Rating Outlooks to its tax-exempt housing ratings. Fitch has assigned a Stable Rating Outlook to all of the referenced bonds.
The affirmation of the 'AAA' rating assigned to the senior bonds reflects the low loan loss expectations for the programs based on the underlying quality of the assets, the mortgage insurance provisions of the loan portfolio and the substantial asset parity requirements and demonstrated performance of the senior bonds.
The upgrade of most of the mezzanine bonds to 'AAA' from 'AA+' and 'AA' is based primarily on the amount of equity generated over the last nine to 13 years retained in the separate indentures. The 'AAA' ratings on the senior and mezzanine bonds reflect the credit quality of the trust's collateral, the adequacy of current and projected revenues to pay debt service and the credit enhancement provided by the debt subordination underlying the senior bonds. Additionally, both the senior and the mezzanine classes have asset parity maintenance requirements of 1.115 times (x) and 1.05x respectively, directing revenues to be used to call bonds of that class prior to paying the debt service of the next junior class. Fitch used the 1.115x and 1.05x asset parity requirements as a guide in determining the rating action for the separate indentures.
The 1996D - 2000E indentures have seasoned and successfully performed to such a degree that the assets in the underlying trust estate, for most of the indentures, support the upgrade of the rating on the subordinate bonds from 'A+' to 'AAA'. The new ratings on the upgraded indentures are fully supported by the respective underlying trust estates and are not expected to rely on the IHFA general obligation (GO) pledge. While payments of interest and principal at maturity for the subordinate bonds are secured by a GO pledge of IHFA's general revenues or assets, the subordinate bonds are also secured by the assets and revenues of the trust estate on a subordinate basis to class I and II bondholders. The 'A+' rating on the subordinate bonds that were affirmed reflects the 'A+' rating assigned to the creditworthiness of the association's GO pledge.
Financial performance for each series has been strong through the life of the indentures, and delinquency rates for each series remain acceptable. The fixed-rate nature of the outstanding bonds provides stability to each indenture as well. Additionally, the respective indentures are also secured by the reserve funds and investments pledged under the trust estate. All of the indentures have a debt service reserve fund sized at 5% of bonds outstanding. No additional bonds are permitted to be issued under these indentures.
A spreadsheet detailing the rating actions in question is available on the Fitch Ratings web site at 'www.fitchratings.com' under the following headers:
Public Finance then U.S. Public Finance then Special Reports.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Contacts:
Fitch Ratings, New York
Eric V. Espino, 212-908-0574
Charles
Giordano, 212-908-0607
or
Media Relations:
Cindy Stoller,
212-908-0526
Email: cindy.stoller@fitchratings.com
