Analyst Dominic De Cayette in S&P's New York office, says "The rating reflects the extremely strong credit quality of the collateral securing the bonds--a pool of mortgages consisting primarily of Federal Housing Authority-insured or Veterans Administration-guaranteed loans; fully funded reserves and sufficient liquidity; the very high credit quality of insurance supporting the mortgages; the extremely strong credit quality of the investments; and cash flow sufficiency demonstrating ample loss coverage protection at the AAA level."
As of Nov. 30, 2003, delinquencies over 60 days amounted to 6.87% of the Georgia Authority's portfolio. Foreclosures totaled 4.57%.
"Though GHFA's foreclosures are greater than those of the Mortgage Bankers Association, delinquencies are slightly less than those of the MBA," De Cayette says. "There are sufficient excess assets under the resolution to provide ample bondholder protection."
A portion of GHFA's entire investment portfolio is rated AA. But S&P finds that "the magnitude and duration of these investments will not adversely affect the rating on the bonds," the analyst says. Cash flows were run under a mix of prepayment stress scenarios. "In all cases, the cash flow runs demonstrate that there are sufficient assets and revenues to pay debt service on a full and timely basis.
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