Moody's places Hous­ing Bonds un­der re­view for down­grade

The Pak Banker - - Front Page -

NEW YORK

Global rat­ing agency Moody's has placed the fol­low­ing rat­ings of stand-alone mul­ti­fam­ily hous­ing bonds with mort­gage en­hance­ments un­der re­view for pos­si­ble down­grade.

Har­rison­burg Rede­vel­op­ment & Hous­ing Auth, VA Tax­able Multi-Fam­ily Hous­ing Rev­enue Bonds (Hunt­ing­ton Vil­lage Apart­ments Project) 2001B; rated Aaa, un­der re­view for down­grade; ap­prox­i­mately $1,720,000 of debt out­stand­ing.

Yonkers In­dus­trial De­vel­op­ment Agency, NY Multi-Fam­ily Hous­ing Rev­enue Bonds 2004; rated Ba1, un­der re­view for down­grade; ap­prox­i­mately $13,190,000 of debt out­stand­ing. Ohio Hous­ing Fi­nance Agency, Multi-Fam­ily Hous­ing Rev­enue Bonds 2005G; rated Ba1, un­der re­view for down­grade; ap­prox­i­mately $5,535,000 of debt out­stand­ing. St. Paul Hous­ing & Rede­vel­op­ment Auth., MN Multi-Fam­ily (GNMA Col­lat­er­al­ized - Riverview High­land Project) 2002; rated Ba1, un­der re­view for down- grade; ap­prox­i­mately $3,710,000 of debt out­stand­ing.

Cash flow pro­jec­tions as­sum­ing 0% rein­vest­ment rates demon­strate that the as­set-to-debt ra­tio is cur­rently, or fore­casted to fall, be­low 100%. Over the next sev­eral weeks, we will as­sess the credit im­pli­ca­tions of the cash flow pro­jec­tions and align the rat­ings ap­pro­pri­ately. This re­view could re­sult in multi-notch downgrades to the rat­ings of the bonds.

The bonds are se­cured by a mort­gage that is guar­an­teed by ei­ther Gin­nie Mae or Fannie Mae's Stand-by Credit En­hance­ment In­stru­ment. Monthly mort­gage re­ceipts are not rein­vested in a guar­an­teed in­vest­ment con­tract (GIC) that as­sures a fixed rate of re­turn, sub­ject­ing the trans­ac­tion 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.

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