Moody's Affirms A1 Rating on Ohio Housing Finance Agency's Issuer Rating

Strategic Insights -

The Ohio Housing Finance Agency's (OHFA or Agency) issuer rating has been affirmed by Moody's Investors Service, with a stable outlook. This decision reflects OHFA's strong balance sheet and excellent operating performance, despite an increase in leverage and a decrease in margins. As of June 30, 2024, OHFA's program asset to debt ratio (PADR) was 1.52x, with an adjusted combined fund balance of $565.6 million or 28.6% of bonds outstanding.

Key Takeaways:

  • Moody's has affirmed the A1 rating on OHFA's issuer rating, citing its very strong balance sheet and excellent operating performance.
  • As of FY2024 (6/30/2024), OHFA's program asset to debt ratio (PADR) was 1.52x, with an adjusted combined fund balance of $565.6 million or 28.6% of bonds outstanding.
  • Despite an increase in leverage and a decrease in margins due to frequent issuance of the Ohio HFA-Resid. Mtge. Rev. Bds. (MBS Prog) (Aa1 stable) in FY2024, OHFA's financial metrics will remain consistent with the current rating.
  • OHFA's loan portfolio, composed of 100% mortgage-backed securities (MBS) collateral, provides strong security for the bonds.
  • The stable outlook on OHFA's issuer rating reflects the Agency's ability to maintain strong operating results, despite continued leveraging, characterized by a strong five-year average margin of 7.54% and sufficient balance sheet resources.
  • Factors that could lead to an upgrade of the rating include continued growth of OHFA's financial strength and a significant increase in PADR.
  • Factors that could lead to a downgrade of the rating include a shift in management approach causing significant deterioration of OHFA's risk profile and financial matrix.

Statistics:

  • OHFA's program asset to debt ratio (PADR) was 1.52x as of June 30, 2024.
  • OHFA's adjusted combined fund balance was $565.6 million or 28.6% of bonds outstanding as of June 30, 2024.
  • OHFA's loan portfolio is composed of 100% mortgage-backed securities (MBS) collateral.
  • OHFA has no taxing power.
  • The principal methodology used in this rating was US Housing Finance Agency Issuer Ratings published in April 2024.
  • The five-year average net revenues as a % of total revenues was 10.53%, exceeding the 8% threshold.
  • The five-year average margin was 7.54%.

Sources:

  • Moody's Investors Service, Moody's Ratings, April 2024
  • Moody's Investors Service, Rating Methodologies, April 2024
  • Ohio Housing Finance Agency, FY2024 Financial Report, June 30, 2024