Moody’s Downgrades 6 HFA Deals

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NEW YORK - Moody's Investors Service said it has downgraded the following six housing finance agency multifamily transactions and removed them from Watchlist, following a review of each transaction's ability to maintain cash flow sufficiency assuming a 0% reinvestment rate.

This action affects approximately $44 million in outstanding debt. All of these transactions are secured by a mortgage that is guaranteed by credit enhancement from either GNMA, Fannie Mae, Freddie Mac or FHA. None of these issues have a Guaranteed Investment Contract (GICs) that assures a fixed rate of return on invested cash, and therefore all are subject to interest rate risk on retained revenues.

As a result, revenue from the monthly mortgage receipts, interest earned on those receipts from money market funds or other short-term investments and monthly mortgage payments need to be sufficient to support debt service on the bonds.

Moody's analyzed each transaction's projected mortgage revenue, assuming no reinvestment earnings on the monthly mortgage receipts and determined that there would not be sufficient coverage of debt service consistent with a Aaa rating.

--$8,310,000 of Indianapolis (City of) IN, Multifamily Housing Revenue Bonds (Cambridge Station Apartments, Phase II) Series 2005. Downgraded to Aa2 from Aaa. Last rated on 11/12/2009, when it was put on Watchlist for Possible Downgrade.

--$7,490,000 of Bexar County Housing Finance Corporation, TX Multfamily Housing Revenue Bonds (GNMA Collateralized - Wurzbach Manor Apartments Project) 2003. Downgraded to A2 from Aaa. Last rated on 10/14/2009, when it was put on Watchlist for Possible Downgrade.

--$16,504,000 of Indianapolis (City of) IN Multifamily Housing Revenue Bonds (GNMA Collateralized Mortgage Loan - Braeburn Village Apartments) Series 2001A. Downgraded to A2 from Aaa. Last rated on 8/24/2009, when it was put on Watchlist for Possible Downgrade.

--$9,340,000 of Town of Clarence, Erie County, Industrial Development Agency, GNMA Collateralized Civic Facility Revenue Bonds (2002 Bristol Village, Inc. Project). Downgraded to A2 from Aaa. Last rated on 8/24/2009, when it was put on Watchlist for Possible Downgrade.

--$1,524,000 of Evansville (City of) IN Multifamily Housing Revenue Bonds (GNMA Collateralized Mortgage Loan - Village Community Partners III, LP Project) Series 2001. Downgraded to Baa1 from Aaa. Last rated on 7/24/2009, when it was put on Watchlist for Possible Downgrade.

--$831,000 of Evansville (City of) IN Multifamily Housing Revenue Bonds (GNMA Collateralized Mortgage Loan - Vann Park Apartments, Phase IV Project) Series 2001. Downgraded to Ba1 from Aaa. Last rated on 7/23/2009, when it was put on Watchlist for Possible Downgrade.

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