LOS ANGELES - Moody's Investors Service placed the A3 rating on $616 million of California Housing Finance Agency multifamily revenue bonds on review for upgrade March 4.
Moody's is reviewing the agency's bonds issued under its Multifamily III indenture between 1997 and 2008. Proceeds from the bonds went toward financing affordable multifamily housing developments in California.
The bonds are backed by a pledge of revenues from the financed projects as well as by a general obligation pledge of CalHFA.
"Our review is prompted by information that the agency is depositing funds into the MFIII Indenture that further strengthen MFIII's credit profile and focuses on the Indenture's ability to withstand potential stresses apart from support by the agency's general obligation pledge," analysts wrote.
As part of the assessment, analysts said they will review cash flow projections to assess the ability of the indenture to repay variable rate demand bonds after the potential expiration of external liquidity facilities in December 2015.
Moody's will also assess the indenture's ability to absorb potential defaults on loans, and review the portfolio of interest rate swaps associated with indenture variable rate debt.
Established in 1975, the CalHFA provides financing and programs to create affordable housing opportunities for low and moderate income residents in California.
The agency makes low-interest rate loans through the sale of tax-exempt bonds, which are repaid by revenues generated through mortgage loans.
