Fitch Updates Rating Criteria for Pooled Multifamily Housing Bonds
Fitch Ratings has updated its sector-specific criteria report for rating pooled multifamily housing bonds. The updated report replaces the existing criteria published on Dec. 20, 2011. No changes to the ratings of existing transactions are anticipated as a result of the application of the updated rating criteria.
Fitch has identified four key rating drivers that affect the credit quality of pooled multifamily housing credits:
--Loan Characteristics: The quality of a multifamily loan pool is largely determined by the type of loans included, performance indicators such as individual loan debt service coverage ratios and property occupancy levels and geographical diversification;
--Financials: Bond programs with strong financial positions provide flexibility to mitigate risks associated with loan performance in the underlying portfolio and investment performance within the bond program;
--Management: The pool sponsor's ability to manage risk in its role as the underwriter and the asset manager should be evident in its historical track record;
--Legal Structure: The characteristics of a bond financing, including the amortization schedule, reserve sizing, the various pledges offered, the cross-collateralization of assets, the trustee-held accounts, and excess cash release mechanisms, are factors weighed in the rating analysis that can significantly influence bondholder security.
The updated criteria report outlines how Fitch evaluates these risk factors in its rating analysis of pooled multifamily housing bonds.
The report is available at 'www.fitchratings.com' or by clicking on the link below.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Rating Criteria for Pooled Multifamily Housing Bonds
Maura McGuigan, +1-212-908-0591
One State Street Plaza
New York, NY 10004
Charles Giordano, +1-212-908-0607
Elizabeth Fogerty, New York, +1 212-908-0526