New York, June 03, 2016 -- Issue: Mortgage Purchase Bonds, 2016 Series B-1 (Non-AMT); Rating: Aa1; Rating Type: Underlying LT; Sale Amount: $40,620,000; Expected Sale Date: 06/08/2016; Rating Description: Housing Finance Agency Pledge;
Issue: Mortgage Purchase Bonds, 2016 Series B-2 (AMT) (Weekly Rate); Rating: Aa1; Rating Type: Underlying LT; Sale Amount: $28,000,000; Expected Sale Date: 06/08/2016; Rating Description: Housing Finance Agency Pledge;
Issue: Mortgage Purchase Bonds, 2016 Series B-2 (AMT) (Weekly Rate); Rating: VMIG 1; Rating Type: Enhanced ST; Sale Amount: $28,000,000; Expected Sale Date: 06/08/2016; Rating Description: Housing Finance Agency Pledge;
Summary Rating Rationale
Moody's Investors Service has assigned the rating of Aa1 to the Maine State Housing Authority ("MaineHousing," "MSHA," or the "Authority") Mortgage Purchase Bonds, 2016 Series B-1 and the rating of Aa1/VMIG 1 to the 2016 Series B-2 (collectively, the "Bonds"). All outstanding long term debt under the Mortgage Purchase Bond program is affirmed at Aa1 with a stable outlook and all existing short term debt is affirmed at VMIG 1.
The long term rating assigned to the Bonds reflects the program's strong financial position resulting from the Authority's active financial management and very strong legal provisions.
The VMIG 1 rating assigned to the 2016 B-2 Bonds is based on the standby bond purchase agreement ("SBPA") provided by State Street Bank and Trust Company ("State Street" or the "Bank"). The Bank is currently rated Aa1(cr)/P-1(cr) by Moody's.
The stable outlook is based on the solid financial position and favorable loan performance.
Factors that Could Lead to an Upgrade
Growth in program asset-to-debt ratio and operating revenues.
Continued maintenance or increases in the current loan portfolio characteristics and performance.
Factors that Could Lead to a Downgrade
Severe housing market or economic downturns.
Dramatic shift in the composition of the loan portfolio toward riskier loans.
Management or state government policy changes which would transfer excess amounts of the program funds out of the bond funds, which are not expected in the foreseeable future.
The Bonds are special obligations of the Maine State Housing Authority. The Bonds will be issued under the General Mortgage Purchase Bond Resolution adopted February 4, 1972 and supplemented with a Series Resolution, which resolutions authorizes the issuance of up to $400,000,000 in one or more series.
Interest shall be payable on the interest payment date - May 15 and Nov. 15 starting November 15, 2016.
Use of Proceeds
The proceeds of the 2016 Series B-1 Bonds are expected to be used by MaineHousing to finance the making or purchase from certain lenders of mortgage loans secured by mortgages that are a first lien on land and the improvements in Maine constituting one-to-four family residences for persons and families of low income, and (iii) pay certain costs of issuing the Bonds.
Proceeds of the 2016 Series B-2 Bonds are expected to be used by MaineHousing to refund, within 90 days after the date of the issuance of the Bonds, certain prior bonds (2007 Series E-2 & 2008 Series D)(the" Prior Bonds") of the Authority which were issued to finance or refinance the making or purchase from certain lenders of interest-bearing obligations secured by mortgages that are a first lien on land and the improvements in Maine constituting one-to-four family residences for persons and families of low income. Upon the refunding of the prior bonds, all or a portion of the outstanding Prior Bonds mortgage loans shall be allocated to the 2016 Series B-2 Bonds.
Following the refunding of the Prior Bonds, MaineHousing expects to reallocate certain related Bank of New York Mellon interest rate swaps to the 2016 Series B-2 Bonds. The Authority expects to terminate these swaps on the their respective optional termination dates and replace them with Royal Bank of Canada interest rate swaps.
MaineHousing has established a Mortgage Purchase Program, pursuant to which it is authorized to make loans on single-family (one to four units) or multi-family (more than four units) housing or purchase such loans from banks, life insurance companies, savings and loan associations, mortgage companies, other financial institutions lawfully doing business in the State and the Federal government for the purpose of providing housing for persons and families of low income.
MaineHousing is empowered to, among other things, issue bonds and notes for the purpose of making or providing monies for purchasing mortgages under its Mortgage Purchase Program and for depositing the required amounts in the Housing Reserve Fund.
The principal methodology used in these ratings was U.S. Housing Finance Agency Single Family Programs published in February 2013. An additional methodology used in the short term ratings was Variable Rate Instruments Supported by Conditional Liquidity Facilities published in March 2015. Please see the Ratings Methodologies page on www.moodys.com for a copy of these methodologies.
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 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.
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Moody's assigns Aa1 to Maine St. Housing Auth. Mortgage Purch. Bds, 2016 B-1 and Aa1/VMIG 1 to the 2016 B-2
Moody's Investors Service, Inc.
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New York, NY 10007