Fitch Affirms Illinois Housing's GO Debt Pledge at 'A+'.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. affirms Illinois Housing Development Authority's (IHDA IHDA Illinois Housing Development Authority ) general obligation (GO) debt pledge at 'A+'. The rating, while not assigned to any specific class of debt, represents an overall credit assessment of the authority's ability to meet its GO pledge requirements. IHDA continues to report a positive financial position, as evidenced by declining leverage ratios; however, returns on assets and equity have decreased over the past four fiscal years primarily due to the lower interest rate environment. For the fiscal year-ended Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. June 30, 2004, IHDA's adjusted debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. fell to 5.6 times (x), placing it at the moderate level range for state housing finance agencies (HFAs). The Fitch preliminary 2004 median adjusted debt-to-equity ratio dropped to 5.6x based on 47 agencies reporting. IHDA's total outstanding debt decreased $300 million from the prior year to approximately $1.5 billion. Additionally, IHDA has $192 million of risk-sharing debt outstanding in the form of mortgage participation certificates mortgage participation certificate A pass-through security that represents ownership in a pool of conventional mortgages put together by Freddie Mac. (MPCs), up from $111 million in the prior year. IHDA's aggregate risk-sharing loss exposure to the MPCs is $159 million in fiscal 2004 compared with $86 million in fiscal 2003. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in fiscal years 2002, 2003, and 2004 were 2.5%, negative 0.2%, and negative 4.7% respectively, falling significantly in 2003 and 2004 due to reduced interest income as a result of declining interest rates and increased expenses. Returns on assets and equity also declined from the previous fiscal year. However, unaudited financial statements for the six months ended Dec. 31, 2004 indicate an improvement in financial performance reflected by further declining leverage ratios and an improvement in operating margins. The authority's $1.98 billion of assets (all proprietary funds) consist of program loans (58%), short-term investments (26%), and long-term investments (16%). Overall, the multifamily program is performing well, while the single-family program delinquencies are slightly above state averages. Other contributing credit factors include the authority's sufficient levels of liquidity and reserves; the quality of its asset base and earnings stream, in light of its public purpose mandate, and the state's reduced but improving economic health; the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. real estate market; and the authority's capable management. A full report detailing IHDA's GO pledge will be available later this month on the Fitch Ratings web site at www.fitchratings.com. |
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