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Moody's Investors Service Inc.

Moody's Assigns Aaa Rating to Public Finance Authority Multifamily Housing Revenue Bonds

Strategic Insights

— 1 min read

The Public Finance Authority is set to issue the $42,500,000 Public Finance Authority Multifamily Housing Revenue Bonds (Foothill Affordable Housing Foundation -- Elliot Baymeadows Apartments Project) Senior Credit Enhanced Series 2025. Moody's Investors Service has assigned an Aaa rating to the proposed bonds, citing the credit enhancement agreement provided by Federal Home Loan Mortgage Corp. (Freddie Mac) and the structure and legal protections of the transaction.

Key Takeaways:

  • The rating is based on the credit enhancement agreement provided by Freddie Mac, which supports the bonds and ensures timely payment of principal and interest to bondholders.
  • The structure and legal protections of the transaction provide additional credit support, highlighting the robust nature of the bond issuance.
  • The bonds will bear interest at an initial fixed rate of 1% per annum, payable on June 1 and December 1, commencing December 1, 2025.
  • The credit enhancement agreement will be sized for the full principal amount of the bonds plus 189 days of interest at the initial bond coupon rate.
  • Conforming draws for principal and/or interest will be honored by Freddie Mac on or before 2:00 pm, Eastern Time, on the business day following the drawing.
  • The trustee is directed to draw on the credit facility upon acceleration or receipt of notice from Freddie Mac directing mandatory redemption due to an occurrence of an event of default under the reimbursement agreement.
  • The CEA terminates on the first to occur of four specified events, including the date the bonds are paid in full, redeemed, or purchased in lieu of redemption.

Statistics:

  • The proposed bond issuance amount is $42,500,000.
  • The initial fixed rate of interest is 1% per annum.
  • The credit enhancement agreement will cover the full principal amount of the bonds plus 189 days of interest at the initial bond coupon rate.
  • The CEA will terminate on the first to occur of four specified events.

Sources:

  • Moody's Ratings, "Moody's Assigns Aaa Rating to Public Finance Authority Multifamily Housing Revenue Bonds (Foothill Affordable Housing Foundation -- Elliot Baymeadows Apartments Project) Senior Credit Enhanced Series 2025" (No date specified, likely 2025)
  • Moody's Investors Service, Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology (published July 2022, available at https://ratings.moodys.com/rmc-documents/386295)

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