As of Dec. 31, 2001, debt service coverage for series A bonds dropped 29%, and debt service coverage on the subordinate series B and C bonds dropped 38%.

The debt service reserve fund is set by S&P as a cushion when the bonds are initially rated. The reserve diminished because the borrower failed to make all payments due. That meant the trustee had to dip into the reserve to make interest payments to the bondholders.

In addition, the unidentified private borrower also failed to provide audited financial statements for the past two fiscal years and ran up debt that is more than 60 days past due, according to White's printed analysis.

Meanwhile, monthly rents on the properties have slipped from $519 to $407 and annual expenses have risen from $2,782 to $3,457. Occupancy is at 83%.

Ten of the 25 vacant units were damaged by fire in July 2001. The remaining 15 vacant units need significant repair for which funds are not available.

With the latest S&P downgrade, the bonds are slipping below S&P's mid-level rating. The ratings begin at AAA, "bullet-proof," Wendy Dolber, managing director and manager of housing group for S&P in New York, tells GlobeSt.com.

The ratings follow a series of plus-and-minus, triple, double and single levels in descending alphabetical order to D for "default," Dobler says.