New York, January 15, 2021 -- Moody's Investors Service has affirmed ratings on ten public housing authorities' (PHA) capital fund bonds. The outlooks on all PHA capital fund bonds is revised to stable from negative.
This rating action affects the following bond programs:
- Alabama Public Housing Authorities' Capital Program Revenue Bonds, Series 2003-B. Rating affirmed at Baa2 with a stable outlook.
- District of Columbia Housing Finance Agency - Capital Fund Program Bonds' Capital Program Revenue Bonds, Series 2005. Rating affirmed at Baa2 with a stable outlook.
- Denver City & County Housing Authority Capital Funding Program's (CO) Capital Fund Program Revenue Bonds, Series 2007 (Three Towers Rehabilitation Project). Rating affirmed at A2 with a stable outlook.
- East Providence Housing Authority-Capital Funds Housing Revenue Bonds' (RI) Capital Funds Housing Revenue Bonds, Series 2002. Rating affirmed at A3 with a stable outlook.
- Industrial Development Board of New Orleans - Capital Fund Revenue Bonds, LA's Capital Fund Program Revenue Bonds Series A of 2003. Rating affirmed at A3 with a stable outlook.
- Maryland Community Development Administration - Capital Fund Securitization's Capital Fund Securitization Revenue Bonds, Series 2003. Rating affirmed at Baa2 with a stable outlook.
- New Jersey Housing and Mortgage Finance Agency-Capital Fund Program Revenue Bonds 2004's Capital Fund Program Revenue Bonds, Series 2004A. Rating affirmed at Ba1 with a stable outlook.
- New Jersey Housing and Mortgage Finance Agency-Capital Fund Program Revenue Bonds 2007's Capital Fund Program Revenue Bonds, 2007 Series A. Rating affirmed at Baa2 with a stable outlook.
- Pennsylvania Housing Finance Agency - Capital Fund Securitization's Capital Fund Securitization Revenue Bonds, Series 2005A. Rating affirmed at Baa1 with a stable outlook.
- Philadelphia Capital Fund Revenue Program's (PA) Capital Fund Program Revenue Bonds, Series 2002A, and Capital Fund Program Revenue Bonds Series C of 2003 and Series D of 2003. Ratings affirmed at A2 with a stable outlook.
RATINGS RATIONALE
The ratings are based on continued satisfactory debt service coverage levels at the respective rating levels. The financings continue to benefit from debt service coverage levels that mitigate potential future declines in funding. Future funding to the programs, which rely on this funding stream as the primary repayment source for the capital appropriation bonds, will depend on future budgets, which may be materially reduced from the current level.
RATING OUTLOOK
The stable outlook reflects the stability of capital fund appropriations as well as satisfactory debt service coverage levels of the projects countering the ongoing pressures on the sector which is highly dependent on future levels of capital funding. Historically, Congress has appropriated more capital funding than requested in the President's annual budget proposals.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- While a rating upgrade is unlikely in a near to medium term, significant and sustained improvement in the programs' debt service coverage ratios, along with sustainable history of strong funding levels and budget proposals would be credit positive
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Substantial declines in capital fund appropriations, resulting in substantial erosion of the respective debt service coverage levels
LEGAL SECURITY
PHA capital fund bonds are paid from capital fund allocations that are appropriated annually by Congress to the US Department of Housing and Urban Development. Under the program, the funding is allocated by HUD to individual PHAs and used by the PHAs, first, to pay debt service on bonds, if any, and then for other capital improvements to their projects. The bond programs also benefit from debt service reserve funds, sized and maximum annual debt service (MADS).
PROFILE
PHA Capital Fund financings are bonds issued by public housing authorities to fund the modernization or repair of various public housing developments. Program funding directly impacts PHA's ability to repay the bonds. Thus the size of each PHA's annual allocation relative to annual debt service on the bonds, the debt service coverage, is one of the key credit factors of these financings as it identifies the programs' resiliency to declines in future funding.
METHODOLOGY
The principal methodology used in these ratings was US Public Housing Authority Capital Fund Bonds published in June 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1126968. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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 credit rating action on the support provider and in relation to each particular credit 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.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
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.
Ferdinand Perrault
Lead Analyst
Housing
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Florence Zeman
Additional Contact
Housing
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
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U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653