NEW YORK--(BUSINESS WIRE)--Fitch Ratings places the following Idaho Housing & Finance Association (IHFA) single-family indenture (2000A-2000E) bonds on Rating Watch Negative:
--$7.2 million single family senior bonds, series 2000A-2000E;
--$800,000 single family mezzanine bonds, series 2000A-2000E.
The series 2000 A mezzanine bonds were inadvertently removed from Fitch's web site and were not included in a Sept. 8, 2011 press release. Fitch would have affirmed the bonds at 'AA+' with a Stable Outlook. The bonds are now displayed with the correct rating history.
The security for the stand alone indentures is the credit quality of the trust's collateral in the form of single-family mortgage loans. The respective bond programs are also secured by the reserve funds and investments pledged under the trust estate. Each series is separately secured.
KEY RATING DRIVERS
ASSET PARITY NON-COMPLIANCE: The Rating Watch Negative reflects the bonds' asset parity ratios which no longer comply with their respective indenture asset parity requirements.
MANAGEMENT OVERSIGHT: Management reports that in July 2013, bonds will be redeemed and assets will be added to restore asset parity ratios to meet minimum indenture requirements.
CONTINUATION OF CURRENT ASSET PARITY LEVELS: For the senior bonds and 'AA' rated mezzanine bonds, should management fail to restore the bonds to minimum asset parity levels required by each series indenture, Fitch is likely to downgrade the ratings to reflect the current asset parity levels. For the 'AAA' and 'AA+' mezzanine bonds that Fitch upgraded in September 2009 to reflect high asset parity ratios, if the asset parity is not restored to these higher levels, Fitch will downgrade the rating to reflect their current levels.
In recent months, various IHFA single family senior and mezzanine bonds no longer comply with their respective minimum asset parity requirements. IHFA management is aware of this non-compliance issue and has indicated to Fitch that asset parity levels will be restored. On the July 1, 2013 call date, IHFA expects to redeem bonds and add assets to the various indentures to restore asset parity ratios. The Rating Watch Negative reflects the current parity levels and the pending restoration to minimum asset parity requirements.
In September 2009, various mezzanine bonds were upgraded to reflect their high asset parity ratios. Since revenues have been lower than anticipated causing asset parity ratios to decline below required levels, restoration to only the minimum requirement would be viewed as a credit negative for the higher rated mezzanine bonds. Subsequently, should management not restore asset parity on these mezzanine bonds to the previous higher levels, the ratings on these bonds will be changed to reflect their current asset parity levels.
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria', (June 12, 2012);
--'State Housing Finance Agencies: Single-Family Mortgage Program Rating Criteria', (Aug. 06, 2012).