The Puerto Rico Housing Finance Authority snagged a AA-minus rating from Standard & Poor's for its upcoming $322 million revenue bond sale.

JPMorgan will price the 2008 capital fund securitization revenue bonds and the debt will be subordinate to the authority's 2003 capital fund bond series. The debt is backed by yearly allocations from the U.S. Department of Housing and Urban Development.

In 2007, Puerto Rico received $137 million from HUD, yet Standard & Poor's analyst Valerie White said the rating takes into account Congress' potential decreases of 4% per year compounded annually in future department allocations. Officials anticipate debt service coverage to be 2.7 times at the time of issuance.

"With all those stresses, it's still over 1.5% debt service coverage at the end of the 20 years," White said.

The transaction will defease a portion of the 2003 bonds, with the remaining proceeds combined with other revenues helping to finance upgrades to 4,300 public housing units among 35 different properties.

"Standard & Poor's also did a management assessment of the [authority] as part of this analysis and determined that they did have the capacity to continue to meet their obligation deadlines under the capital funds rules and regulations, and that is a key component to the credit worthiness of these transactions," White said in a conference call regarding the upcoming sale.

Fitch Ratings said it expects to release its rating on the credit by early next week. Moody's Investors Service has yet to release its rating on the upcoming deal, but in December confirmed its Aa3 rating on the 2003 capital fund revenue bonds.

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