Moody's Assigns Aa1 Rating to California Statewide Communities Development Authority Multifamily Housing Revenue Bonds

Strategic Insights -

The California Statewide Communities Development Authority has issued $30,465,000 in Multifamily Housing Revenue Bonds (Oak Park Apartments Project) Senior Credit Enhanced 2025 Series H, which have been assigned an Aa1 rating by Moody's Investors Service. The rating is based on the credit enhancement instrument provided by Fannie Mae, which supports the bonds and ensures timely payment of principal and interest to bondholders. The bonds bear interest at a fixed rate from 2026 to 2035, with a mandatory tender or redemption option.

Key Takeaways:

  • The Aa1 rating is based on the credit enhancement instrument provided by Fannie Mae, which is currently rated Aa1 and P-1 for long-term and short-term obligations, respectively.
  • The rating methodology used is the Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology, published in July 2022.
  • The CEI will be sized for the full principal amount of Bonds plus initially the amount of days from the closing until the first interest payment date on February 1, 2026.
  • The trustee is directed to draw on the CEI to pay the full amount of principal and interest on the Bonds when due.
  • The CEI terminates on the earliest of August 6, 2035, or the date on which Fannie Mae has honored all draws which automatically and permanently reduce the principal portion of the CEI to zero.

Statistics:

  • $30,465,000: the principal amount of the bonds
  • 1st of each February and August: the dates when interest is payable
  • 2035: the end date of the initial fixed rate
  • 2026: the first interest payment date
  • 183 days: the CEI will be sized at this minimum amount after the initial payment date
  • 2:00 p.m. (noon): the deadline for conforming draws for principal and/or interest
  • 1:00 p.m., ET: the latest time Fannie Mae will honor drawings

Sources:

  • Moody's Investors Service
  • Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology, published in July 2022, available at https://ratings.moodys.com/rmc-documents/386295
  • Fannie Mae, rated Aa1 for long-term obligations and P-1 for short-term obligations