Moody's Investors Service has downgraded $1.2 billion in New Jersey Housing & Mortgage Finance Agency bonds.
On Thursday night Moody's downgraded the agency's issuer rating and $459 million in the agency's home mortgage bonds to Aa2 from Aa1. It also downgraded $757 million in the agency's housing revenue bonds to Aa3 from Aa2.
Regarding the downgraded issuer rating and the home mortgage bonds, Moody's analyst Richard Kubanik and Moody's associate managing director Florence Zeman said, "the downgrade reflects the weakening financial position as demonstrated by fiscal 2013 losses, poor mortgage portfolio performance driven by high single family foreclosures over 13% and the challenging operating environment highlighted by a depressed real estate market with single family home prices still 17% below peak levels."
For a strength, the analysts cited the agency's strong asset-to-debt ratio of 1.51 times on Dec. 31, 2013.
To explain Moody's downgrade of the housing revenue bonds, they mentioned that the foreclosure rate has increased to a very high 16.3% level as of May 31, 2014, that there were financial losses of 6% in fiscal 2013 following losses of 1% in fiscal 2012.
The analysts also noted that variable rate debt is a high 51% of outstanding debt.
For strengths, they said the program asset to debt ratio was 1.15 times and that 59% of the loans are insured.
Moody's has a stable outlook on agency's issuer rating and on the home mortgage bonds. It has a negative outlook on the housing revenue bonds.
