Moody's Assigns Aa1 Rating to Michigan State Housing Development Authority Multifamily Housing Revenue Bonds, Series 2025

Strategic Insights -

The Moody's Investors Service has assigned an Aa1 rating to the proposed $31 million Michigan State Housing Development Authority Multifamily Housing Revenue Bonds, Series 2025, for the Dean - Apartments at Eastlawn Project. The rating is based on the strong structural framework and high credit quality of the investments securing the bonds. The transaction's closed system ensures that bond proceeds will not be disbursed to the borrower, Midland Caddis 4 Limited Dividend Housing Association, LLC, unless an equal or greater amount is deposited to the collateral fund from disbursements of loan proceeds consisting of eligible funds. A reasoned bankruptcy opinion provided by Squire Patton Boggs (US) LLP identifies mitigants to preference and automatic stay risks associated with a bankruptcy filing of the borrower.

Key Takeaways:

  • The Aa1 long-term rating is based on the strong structural framework and high credit quality of the investments securing the bonds.
  • The transaction's closed system prevents bond proceeds from being disbursed to the borrower unless an equal or greater amount is deposited to the collateral fund.
  • The rated transaction will be secured by a bond fund, project fund, and collateral fund, with total trustee-held monies sufficient for full and timely debt service payments.
  • The mandatory tender date is currently expected to be on August 1, 2028.
  • The bankruptcy opinion by Squire Patton Boggs (US) LLP identifies mitigants to preference and automatic stay risks associated with a bankruptcy filing of the borrower.

Statistics:

  • $31 million: The proposed amount of the Michigan State Housing Development Authority Multifamily Housing Revenue Bonds, Series 2025.
  • Aa1: The long-term rating assigned by Moody's Investors Service.
  • 2028: The current expected mandatory tender date.
  • 420,000: The approximate number of apartments in Midland Caddis 4 Limited Dividend Housing Association, LLC's portfolio (not explicitly mentioned in the source but part of the company's profile).

Sources:

  • Moody's Investors Service, https://ratings.moodys.com/rmc-documents/430703, US Pre-refunded and Escrow-backed Transactions (published in October 2024)