NEW YORK - Moody's Investors Service said it has downgraded the underlying rating on the Memphis Health, Education, and Housing Facilities Board $8.325 million of multifamily housing revenue bonds, Series 2000A (Hickory Pointe Apartments) to B1 from Ba1.
The negative outlook is being maintained. These bonds continue to be MBIA-insured and therefore benefit from MBIA's Aaa rating. Moody's does not rate the subordinate bonds which are currently in default.
The multiple notch downgrade on the underlying senior bond rating is due to defaults under the lease (failure to provide the required financial statements and certificates to the trustee, and execution of management agreement without the approval of bondholders) which trigger events of default under the indenture, and transfer of funds from the Series A debt service reserve fund, in the amounts of $44,000 and $64,000, to pay a portion of principal and interest on the senior bonds on January 1 and July 1, 2005, respectively.
The remaining balance in the debt service reserve fund for senior bonds is approximately $513,000. Since the events of default above, MBIA, as the insurer of the senior bonds, has been directing the flow of funds under the indenture.
Hickory Pointe Apartments is a 240-unit garden style property located in the southeast section of Memphis.
