Fitch Rates Maryland CDA's Housing Revenue Bonds 2013 Series A 'AA+';
NEW YORK -- February 7, 2013
Fitch Ratings assigns a long-term rating on the following Maryland CDA (MCDA)
Housing Revenue Bonds:
--$10.925 million MCDA Housing Revenue Bonds, 2013 Series A 'AA+'.
Additionally, Fitch affirms approximately $188.5 million in housing revenue
bonds (a full list of ratings follows at the end of this release) of the
approximate $389.1 million of total parity debt outstanding under the
resolution. The difference in outstanding bond amount of Fitch rated debt and
total debt outstanding under the resolution is from debt obligations which
Fitch was not asked to provide a rating.
The Rating Outlook for the bonds is Stable.
The trust indenture pledges all the mortgages in the loan portfolio consisting
of multifamily, single family and group homes as well as the funds pledged
under the legal provisions of the resolution.
KEY RATING DRIVERS
PORTFOLIO FEDERALLY INSURED: As of Sept. 30, 2012, approximately 97% of the
multifamily portfolio is partially or fully insured by the Federally-backed
entities: Ginnie Mae, Fannie Mae, Freddie Mac, and FHA risk-share.
SUFFICIENT OVER-COLLATERALIZATION: On a cash flow basis, the assets under the
resolution show a minimum asset parity ratio of 108% although MCDA has the
right to withdraw excess assets. However, by practice, MCDA continues to leave
sufficient over-collateralization in the indenture.
CAPABLE MANAGEMENT OVERSIGHT: MCDA has demonstrated strong programmatic
oversight capabilities and has had a long successful history of administering
INDENTURE CONSIDERATIONS: The rating is constrained by the issuer's ability to
withdraw excess funds and to include various types of loans other than first
The 2013 series A bonds are the 42nd series of bonds to be sold under a
general bond resolution adopted on Nov. 1, 1996 and are on parity with all
bonds issued previously under the indenture. The 2013 series A bonds will be
used to finance in part the development known as Parkview Towers and have
credit enhancement under the FHA risk-share program whereby providing a 50/50
split on the risk of the project.
The portfolio mainly consists of 60 multifamily residential developments
which, as of September 30, 2012, had an aggregate outstanding mortgage balance
of $377.4 million. Additionally, the portfolio consists of single-family
residences and group homes which account for $8.6 million in loans. As of
Sept. 30, 2012, 97% of the portfolio was insured by a governmental entity such
as: Ginnie Mae (79.9%), Fannie Mae (6.2%), Freddie Mac (0.8%), and FHA
risk-share (10.5%) providing a 50/50 split on project risk. All of these
entities are backed by the U.S. Government which is currently rated 'AAA' with
a Negative Outlook by Fitch. In addition, the Maryland Housing Fund insures
1.6% of the loan portfolio while 0.4% remains uninsured.
More than 38% of the multifamily units in the portfolio receive rental
assistance payments under Section 8 of the U.S. Housing Act of 1937 or
interest-rate subsidies under Section 236 of the National Housing Act. The
remaining 62% of the units do not receive rental or interest-rate subsidies.
Credit concerns are related to the bond resolution allowing various types of
loans including uninsured and second lien mortgages. These concerns are
mitigated by the current loan portfolio being 97% insured by a government
entity, management demonstrating strong programmatic oversight, and the
consistent strong performance of the portfolio.
Additionally, Fitch affirms the following ratings:
--$53.8 million MCDA Housing Revenue Bonds, 2004 Series B, C, & D at 'AA+';
--$36.1 million MCDA Housing Revenue Bonds, 2005 Series A, B, & C at 'AA+';
--$18.3 million MCDA Housing Revenue Bonds, 2006 Series A, B, C, & D at 'AA+';
--$26.8 million MCDA Housing Revenue Bonds, 2007 Series A, B, & C at 'AA+';
--$26.7 million MCDA Housing Revenue Bonds, 2008 Series A, B, C, & D at 'AA+';
--$7.4 million MCDA Housing Revenue Bonds, 2009 Series A at 'AA+';
--$19.5 million MCDA Housing Revenue Bonds, 2012 Series A, B, & D at 'AA+.
Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Rating Criteria for Pooled Multifamily Housing Bonds', (Dec 20, 2012);
--'Revenue-Supported Rating Criteria', (June 12, 2012).
Applicable Criteria and Related Research:
Rating Criteria for Pooled Multifamily Housing Bonds
Revenue-Supported Rating Criteria
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Charles Giordano, +1-212-908-0607
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Kasia Reed, +1-212-908-0500
Maura McGuigan, +1-212-908-0591
Elizabeth Fogerty, New York, +1 212-908-0526
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