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Fitch Boosts Rating on NY Housing Bonds

NEW YORK CITY-Two series of New York State Housing Finance Agency bonds are upgraded to AA+, backed by a BofA letter of credit.

By Paul Bubny | Updated on December 30, 2008

NEW YORK CITY-Fitch Ratings is upgrading its long-term rating on two series of New York State Housing Finance Agency bonds from A+ to AA+, based on a standby letter of credit from Bank of America. The higher rating, for HFA’s 2003 series L and M refunding service contract revenue bonds, is effective Jan. 14. Fitch is also assigning a short-term rating of F1+ based on the LOC.

According to a release, a total of $177.5 million of series L and M bonds are outstanding, including just under $63.8 million of sub-series M-1 and $25 million of sub-series M-2. Fitch says that in addition to the BofA LOC, other factors prompting its rating actions include conversion of the interest rate on the bonds from an auction-rate mode to a weekly rate mode and HFA’s reoffering of the bonds in a weekly rate mode.

The rating will expire upon Jan. 14, 2012, the stated expiration date of the LOC, unless the date is extended; any prior termination of the LOC; or defeasance of the bonds, whichever comes first. The LOC provides full coverage of principal plus an amount equal to 56 days’ interest at a maximum rate of 12%, based on a 365-day year and purchase price for tendered bonds, according to Fitch. The remarketing agent for the series L and sub-series M-1 bonds is Citigroup Global Markets, while Ramirez & Co. is the remarketing agent for the sub-series M-2 bonds.

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