NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms Illinois Housing Development Authority's (IHDA) general obligation (GO) rating at 'AA-'.
The Rating Outlook is Stable.
IHDA's GO pledge is backed by a full faith and credit pledge of its administrative fund.
KEY RATING DRIVERS
INCREASING FINANCIAL POSITION: In recent fiscal years (FYs), IHDA has consistently reported operating profits, lowered their debt-to-equity position, and increased profitability ratios.
DECLINING GO EXPOSURE: As of June 30, 2015, IHDA's GO exposure has declined approximately 14% since 2013.
MINIMAL VARIABLE-RATE DEBT: IHDA has maintained a low exposure to variable rate debt obligations (12%) in comparison to its peers which is viewed as a credit positive. Approximately 44% of this variable-rate debt is swapped to a synthetic fixed-rate.
SOUND INVESTMENTS: Management maintains conservative investment strategies as evidenced by IHDA's safe and liquid investments.
STRONG FINANCIALS AND DECLINING EXPOSURE: The continuation of strong financial performance and declining GO exposure would be viewed as a credit positive.
UNANTICIPATED PROGRAM LOSSES: Should program losses be higher than anticipated and begin to deteriorate excess assets there could be negative pressure on IHDA's GO rating. However, the possibility of this is remote given overcollateralization levels within IHDA's programs.
The rating represents an overall analysis of the authority's ability to meet its GO obligations. The affirmation primarily reflects IHDA's strong financial position, declining GO exposure, and sufficient reserve levels.
IHDA has consistently demonstrated a strong financial position in recent fiscal years. In FY 2014, IHDA demonstrated a Fitch-adjusted debt to equity ratio of 2.5x which is lower than the FY 2014 median for all 51 state housing finance agencies (SHFAs) of 3.4x. IHDA decreased its debt outstanding to approximately $1.3 billion in FY 2014 from $1.45 billion in FY 2013 which marks the fourth consecutive year of decreases. Additionally, IHDA increased its net interest spread in FY 2014 to 34.3% from 24.5% in FY 2013. In recent years, IHDA has consistently reported positive operating profits despite adverse housing conditions.
As of June 30, 2015, IHDA's GO exposure has declined approximately 14% since 2013. Additionally, management has maintained a low exposure to variable-rate debt obligations in comparison to its peers which is viewed as a credit positive. IHDA has approximately 12% of debt outstanding in the variable-rate mode which is lower than the average of 23% for all 51 SHFAs.
Additional information is available at 'www.fitchratings.com'.
Revenue-Supported Rating Criteria (pub. 16 Jun 2014)
State Housing Finance Agencies General Obligation Rating Criteria (pub. 26 Feb 2015)
Dodd-Frank Rating Information Disclosure Form