Moody's Assigns Aa1 Rating to $62.3 Million Housing Finance Authority of Miami-Dade County Bonds

Strategic Insights -

Moody's Investors Service has assigned an Aa1 rating to the proposed $62.3 million Housing Finance Authority of Miami-Dade County, Florida Multifamily Housing Revenue Bonds (Residences at Palm Court), Series 2025A, due to a Direct Pay Credit Enhancement Agreement (CEA) provided by Federal Home Loan Mortgage Corp. (Freddie Mac) to support the bonds. The rating is based on the structure and legal protections of the transaction, which ensure timely payment of principal and interest to bondholders.

Key Takeaways:

  • The Aa1 rating is based on the credit enhancement provided by Freddie Mac and the structure of the transaction, which offers strong protection for bondholders.
  • The CEA is sized for the full principal amount of the bonds plus 189 days of interest at the highest bond coupon rate.
  • Interest on the bonds will be payable semiannually, commencing January 1, 2029, and the trustee will draw on the CEA to pay the full amount of principal and interest when due.
  • Moody's rating methodology used in this assessment included the Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology published in July 2022 and the US Pre-refunded and Escrow-backed Transactions methodology published in October 2024.
  • The bonds are expected to be delivered in June 2025 and will bear interest at a fixed rate equal to the pass-through rate.
  • The rating could be upgraded if the US Government is upgraded, or if credit enhancement is provided by Freddie Mac or other counterparties.
  • The rating could be downgraded if the US Government is downgraded, or if cash flow projections demonstrate insufficient revenues to pay debt service.

Statistics:

  • Bond amount: $62.3 million
  • Rating: Aa1
  • Credit enhancement: Direct Pay Credit Enhancement Agreement (CEA) provided by Freddie Mac
  • Interest payment date: Semiannually on each July 1 and January 1, commencing January 1, 2029
  • CEA size: Full principal amount of bonds plus 189 days of interest at the highest bond coupon rate
  • Expiration date of Freddie Mac's obligation: The first to occur of (i) the honoring by Freddie Mac of an advance which automatically and permanently reduces the principal portion to zero, or (ii) Freddie Mac's receipt of a certificate from the trustee stating that there are no Bonds outstanding

Sources:

  • Moody's Ratings (Moody's)
  • Federal Home Loan Mortgage Corp. (Freddie Mac)
  • Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology, published in July 2022, available at https://ratings.moodys.com/rmc-documents/386295
  • US Pre-refunded and Escrow-backed Transactions methodology, published in October 2024, available at https://ratings.moodys.com/rmc-documents/430703
  • Rating Methodologies page on https://ratings.moodys.com