Fitch Ratings has assigned a 'AA+' rating to the following
The loans are expected to have a credit enhancement under the FHA risk-sharing program.
The Rating Outlook is Stable.
RATING ACTIONS
Entity / Debt
Rating
Prior
LT
AA+
Affirmed
AA+
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VIEW ADDITIONAL RATING DETAILS
SECURITY
The HRB resolution pledges to the parity bonds all mortgages in the loan portfolio (other than those made or purchased from standalone bonds) consisting of multifamily and group homes, as well as additional funds pledged under the legal provisions of the resolution.
KEY RATING DRIVERS
Asset Quality (Strong): As of
Cash Flow and Overcollateralization (Strong): On a cash flow basis, the assets under the resolution (assuming a withdrawal of
Financial Resources and Program Structure (Strong): The HRB portfolio maintains strong financial resources exhibited by the program's financial asset parity of 114% as of
Asymmetric Risk Factors (Neutral): The rating is constrained to its current level because of the issuer's ability to withdraw excess assets from the resolution and to include various types of loans other than first lien mortgages. However, MCDA has demonstrated strong oversight of the HRB portfolio and has had a long, successful history of administering multifamily programs.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
The issuer's ability to withdraw excess assets from the resolution and to include various types of loans other than first lien mortgages constrains the rating to its current level.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Removal of assets without corresponding debt reduction, resulting in a decline in asset parity and reduction in available liquidity.
Material additions of uninsured loans coupled with an increase in uninsured construction risk exposure, prolonged delays, and/or declines in financial performance.
A decline in asset parity that demonstrates insufficient assets under stressed scenarios to address debt service payments in a timely manner.
Best/Worst Case Rating Scenario
International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
CREDIT PROFILE
The MCDA was created in 1970 by the state to meet the shortage of adequate, safe, and sanitary housing in
The series 2023 B bonds are on parity with all bonds previously issued under the resolution except the
The series 2023 B bond 'AA+' rating reflects strong asset quality, sufficient overcollateralization, good portfolio oversight and solid performance, along with appropriate resolution and series legal provisions.
The underlying loan portfolio securing the resolution's bonds, excluding those under the series 2017 A and B bonds, is primarily comprised of 71 multifamily mortgage loans, which, as of
Nearly the entire multi-family loan portfolio is insured, with only 0.4% of the loan portfolio uninsured. Approximately 99% of the multi-family loan portfolio is partially or fully insured by one of the following federally-backed agencies: FHA risk-share (90.8%),
Fitch's ratings are forward-looking in nature, and Fitch will monitor developments in the sector and incorporate qualitative and quantitative inputs based on expectations for future performance and assessment of key risks. As of
Date of Relevant Committee
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
Additional information is available on www.fitchratings.com
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