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Rating Action:

Moody's downgrades the rating of the City of Chicago's (IL) Multi-Family Housing Revenue Bonds, Series 1999A (GNMA Collateralized - Hearts United Apartments) to Aa1 from Aaa in conjunction with methodology change; removes from review for downgrade

Global Credit Research - 07 May 2013

Approximately $4.6 million of outstanding debt affected

New York, May 07, 2013 -- Moody's has downgraded the rating of the City of Chicago's (IL) Multi-Family Housing Revenue Bonds, Series 1999A (GNMA Collateralized - Hearts United Apartments) to Aa1 from Aaa. This action removes the rating from review for downgrade.

The rating was placed under review for downgrade in conjunction with the December 13, 2012 publication of our methodology US Stand-Alone Housing Bond Programs Secured by Credit Enhanced Mortgages. This action, which affects approximately $4,620,000 of outstanding debt, also removes the rating from review for downgrade.

RATING RATIONALE

During the review, we determined that the affected bond program did not meet certain criteria discussed within our methodology which allows it to maintain its Aaa rating. The rating was downgraded to Aa1 to reflect vulnerability to projected insufficiencies in the event of an administrative error. This rating action does not imply that the aforementioned bond program experienced administrative error, but rather that our methodology now considers the possibility this may occur.

Strengths

* High credit quality of credit enhanced mortgage

* No reliance on performance of underlying mortgage

* Asset-to-debt ratio greater than 100.00%

Challenges

* Performance relies on proper administration and adherence to mandatory provisions of the trust indenture and financing agreement by all parties

* Little to no additional security is available from outside the trust estate

WHAT COULD MAKE THE RATING GO UP

* Minimum asset-to-debt ratio is greater than or equal to 103.00%

WHAT COULD MAKE THE RATING GO DOWN

* Projected cash flow or asset-to-debt ratio insufficiencies

* Diminished or less-than-expected asset-to-debt ratio

* Downgrade of the US government (Aaa negative) or other credit enhancement provider, if applicable

* Downgrade of investment provider, if applicable

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was US Stand-Alone Housing Bond Programs Secured by Credit Enhanced Mortgages published in December 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Thomas Song
Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Ferdinand S. Perrault
Vice President - Senior Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's downgrades the rating of the City of Chicago's (IL) Multi-Family Housing Revenue Bonds, Series 1999A (GNMA Collateralized - Hearts United Apartments) to Aa1 from Aaa in conjunction with methodology change; removes from review for downgrade
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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