Moody's Investors Service downgraded the rating of Colorado Housing and Finance Authority (CHFA) to A2 from A1 on Friday.
This action affects an approximate $65 million of Class III bonds outstanding as of December 31, 2010 contained in CHFAs Single Family Mortgage Program Bonds and Multi-Family/Project Bonds Indentures. CHFA also maintains several stand-alone, Senior/Subordinate bond programs. While these subordinate tranches carry the general obligation of the Authority, they are not affected by the downgrade as they are self-supporting.
The downgrade reflects CHFAs very high composition of variable rate debt (currently at 74% of total debt outstanding), potential losses arising from their variable rate debt profile as well as the material impact of payments due to Lehman Brothers Special Financing, Inc. (LBSF) and Lehman Brothers Financial Product, Inc. (LBFP) resulting from CHFA's final settlement of the Lehman Derivatives ADR notice.
The outlook is stable based on CHFA's satisfactory financial position, decline in delinquency and the extension of the Temporary Credit Liquidity Program (TCLP) liquidity facilities from 2012 to 2015 (accounting for 33% of total variable rate demand obligations).
Also on Friday, Moody's said it placed on watch for possible downgrade the Aa2 rating of the $1,160,785,000 of outstanding New Jersey Housing and Mortgage Finance Agency single-family housing revenue bonds.
The review of the Housing Revenue Bond Program rating is based on the weak performance of 8,123 single family whole loans supporting the bonds as demonstrated by the high foreclosure rate which reached 11.20% as of September 30.
Today's rating action does not affect the ratings nor outlooks of any other programs. New Jersey Housing and Mortgage Finance Agency's Issuer rating remains Aa1 Stable, Home Mortgage Purchase Bonds is rated Aa1 Stable and Home Buyer Revenue Bonds is rated Aaa Stable.
