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Moody's Investors Service Inc.

Moody's Assigns Aa1 Rating to Pennsylvania Housing Finance Agency Special Limited Obligation Multifamily Housing Development Bonds

Strategic Insights

— 1 min read

Moody's Investors Service has assigned a Aa1 rating to the proposed $13.94 million Pennsylvania Housing Finance Agency Special Limited Obligation Multifamily Housing Development Bonds (Baldwin Towers) (Fannie Mae MBS-Secured) Series 2025. The rating is based on the high credit quality of the collateral provided by Federal National Mortgage Association (FNMA, Aa1 stable), a structural framework that reduces the administrative complexity of the deal, and cash flow projections that exhibit sufficient revenues to pay timely debt service.

Key Takeaways:

  • The proposed bonds are secured by $13.94 million in bond proceeds and lender funds held by the trustee.
  • The security is provided through Fannie Mae's guarantee of timely interest and principal payments, regardless of the underlying mortgage loan's performance.
  • The cash flows assume a 0% interest rate, and surplus moneys cannot flow out of the trust absent Moody's reviewing cash flows that show sufficiency and will not result in a lowering of the rating on the bonds.
  • The factors that could lead to an upgrade of the rating include an upgrade of the US government and/or the credit enhancement, while a downgrade of the US government and/or credit enhancement (Fannie Mae) or cash flow projections that demonstrate insufficient revenues to pay debt service could lead to a downgrade.
  • The principal methodology used in this rating was US Standalone Housing Bonds Secured by Credit-Enhanced Mortgages published in October 2024.

Statistics:

  • The proposed bonds have a face value of $13.94 million.
  • The bonds are expected to be delivered in July 2025.
  • The cash flows assume a 0% interest rate.
  • The trust has a build-up of funds in the Revenue Fund that cannot be released from the trust until MBS payments are made.

Sources:

  • Moody's (2025) - Moody's Ratings (Moody's) has assigned a Aa1 rating to the proposed $13.94 million Pennsylvania Housing Finance Agency Special Limited Obligation Multifamily Housing Development Bonds (Baldwin Towers) (Fannie Mae MBS-Secured) Series 2025.
  • Moody's (2024) - US Standalone Housing Bonds Secured by Credit-Enhanced Mortgages.

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