Fitch Rates Alaska Housing Finance Corp.'s $190MM 2006 Collateralized Bonds 'AAA'.

NEW YORK -- Fitch assigns a 'AAA' rating to the $190.0 million Alaska Housing Finance Corporation's (AHFC or the corporation) collateralized bonds, 2006 first series bonds. Fitch also affirms the 'AAA' rating on the $272.0 million outstanding collateralized bonds (Veterans Mortgage Program) issued under the master indenture. The bonds are scheduled to sell competitively the week of September 5, 2006.

The current offering is the fifth sale of bonds issued under a master trust indenture adopted by the corporation in October 1999. The 2006 first series bonds will be primarily 30-year fixed rate bonds. This bond issue will refund prior notes and other obligations of the corporation and purchase approximately $18.0 million of qualified veterans mortgage loans. Qualified mortgage loans consist of mortgages with loan to value ratios (LTVs) exceeding 80% to be guaranteed or insured by the Department of Veterans Affairs (VA), the Federal Housing Administration, or private mortgage insurers. Approximately 68% of the warehoused loan portfolio consists of mortgages insured by the VA. The remaining mortgages have LTVs of 80% or less. Approximately 1% of the loans in the Veterans Mortgage Program portfolio are delinquent 60 days or more.

The long-term rating assigned to these bonds reflects the indenture's security provisions, strong credit quality of the existing collateral and related credit enhancements, adequacy of projected revenues to pay debt service, availability of a debt service reserve account and overcollateralization requirement fund (OCR), and strong management capabilities in combination with the financial strength of the corporation. Additionally, the bonds are general obligations of the corporation and the state (rated 'AA+' and 'AA', respectively, by Fitch).

The overcollateralization requirements equal or exceed Fitch's 'AAA' rating levels. The debt service reserve account is required to be funded at 2% of mortgages outstanding and provides a source of liquidity to the program. The reserve requirement does not apply to current or future mortgages backed by mortgage certificates guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac. Pledged to this indenture from the OCR fund is a required minimum reserve amount of 12.5% of the mortgages outstanding under the indenture. The reserves in the OCR fund consist of investment securities and additional mortgages. Deposits to the special debt service account and the OCR fund will be made by AHFC from available funds to fulfill minimum reserve level requirements.

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