Standard & Poor’s yesterday placed California Housing Finance Agency bonds on CreditWatch with negative implications.
The negative watch applies to the agency’s AA-minus issuer credit rating, as well as its home mortgage revenue bonds.
“The rating actions reflect our opinion of CalHFA’s declining profitability and equity, which we believe are particularly relevant due to what we consider the agency’s relatively high risk profile,” said Standard & Poor’s analyst Karen Fitzgerald. “We believe the agency faces challenges given the real estate market and its debt profile.”
Moody’s Investors Service put CalHFA’s Aa3 general obligation bond rating under review for possible downgrade last September.
The agency has been hard hit by California’s severe housing bust and by the financial crisis, which has pushed up rates on the variable-rate bonds that finance many of its outstanding fixed-rate mortgages.
Standard & Poor’s said CalHFA lost $46 million in the final six months of 2008, and non-performing assets rose to a record 5.1% on Dec. 31 from 3.5% on June 30. That’s more than three times the rate for fiscal 2007.
About 8.4% of the loans that back the agency’s home mortgage revenue bonds were more than 60 days delinquent or in foreclosure in the first quarter of 2009, Standard & Poor’s said.