Moody's places Housing Bonds under review for downgrade
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.