NEW YORK--()--Fitch Ratings has updated its sector-specific report for rating military housing bonds. The updated report replaces the existing criteria published on Sept. 22, 2011 with a more detailed description of the risk factors and metrics considered in Fitch's analytical approach. No changes to the ratings of existing transactions are anticipated as a result of the application of the updated rating criteria.
Fitch has identified five key rating drivers that affect the credit quality of military housing credits:
--Basic Allowance for Housing (BAH) and Occupancy: Financial health of the military housing project is tied to BAH rates and occupancy levels, which directly affects debt service coverage levels;
--Existing Unit Cash Flow: Dedication of revenue from existing housing units during the initial development phase (IDP)is necessary to mitigate construction risk;
--Meeting IDP Schedule: Meeting the project construction schedule is key to ensuring that new and/or rehabbed units are on line generating revenue to pay debt service;
--BRAC: Base Realignment and Closure(BRAC)is a risk that is ever present;
--Base Essentiality: An installation's importance to the military is directly linked to the base's level of essentiality, its history and its mission relative to the current security environment of the U.S.
The updated criteria report outlines how Fitch evaluates these risk factors in its rating analysis of military housing bonds.
The report is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Military Housing Rating Criteria