Fitch Rates Alaska HFC $62.5MM Hsg Dev Bonds `AA+/F1+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 13, 2000

Fitch assigns a rating of `AA+/F1+' to Alaska Housing Finance Corporation's (AHFC) $62.5 million housing development bonds, 2000 series A and B. The bonds are scheduled to close on Dec. 13, 2000, as a negotiated transaction through a syndicate led by Newman and Associates, Inc. The bonds are tender option bonds and will initially bear a variable rate of interest reset weekly.

Proceeds from the $20.7 million series A bonds will be used to fund mortgage loans for projects under AHFC's multifamily, special needs and congregate housing loan program. Proceeds from the $41.7 million series B bonds will be used to finance, or reimburse the corporation for financing, expenditures for state governmental- purpose projects. Although a portion of the bonds are secured by a pledge of mortgage payments from the housing projects, the bonds' rating reflects the primary security provided by the corporation's general obligation (GO) debt pledge. Fitch recently upgraded AHFC's GO debt pledge to `AA+' from `AA'. (See Fitch's press release dated Dec. 6, 2000, available on Fitch's web site at `www.fitchratings.com'.)

The `F1+' short term rating assigned to the bonds reflects the strong credit quality of AHFC's ability to provide liquidity on a timely basis in the event tendered bonds are not remarketed. AHFC holds more than $650 million of high quality investments in its unrestricted General Account.

The corporation's GO debt pledge rating reflects its strong financial position, favorable operational and financial results, successful management track record, and sufficient liquidity and reserves. Credit concerns remain centered on the geographic concentration of the AHFC's consolidated loan portfolio and the real estate market's vulnerability to the state's oil-dependent economy.

The AHFC's consolidated financial statements for the fiscal year ended June 30, 2000 show a stable level of earnings and strong financial position despite combined transfers and state appropriations, of approximately $500 million over the last five fiscal years. AHFC's leverage ratios are among the lowest of all housing finance agencies. Its debt-to-equity ratio equaled 1.7 times (x) in fiscal 2000, a slight increase from 1.4x during 1999, resulting from an increase in debt outstanding of 20% from the prior year, while the corporation's equity base is relatively unchanged from a year ago.

AHFC's net income in fiscal 2000 totaled nearly $82 million, relatively unchanged from fiscal 1999 when it was $80 million. Net Interest spread (net income divided by total interest income) equaled 45.4% during fiscal year 2000, well above average (19.5%) for all state housing finance agencies (SHFAs). Net operating margin was 23.4% in fiscal 2000, nearly double the median (12.2%) for all SHFAs. Furthermore, the corporation's total loan portfolio of more than 28,000 single-family loans (excluding mobile homes) continues to perform favorably. Approximately 1.3% of the loans was 60 days or more delinquent, excluding a small number of real estate owned loans, as of Aug. 31, 2000.