Fitch Rates Utah Housing Corp 2006 Series E.

NEW YORK -- Fitch rates the following Utah Housing Corporation (the corporation) 2006 series E single-family mortgage bonds as follows:

-- $13.2 million class I variable-rate bonds 'AAA/F1+';

-- $16.5 million class I fixed-rate bonds 'AAA';

-- $1.8 million class II bonds 'AA';

-- $3.5 million class III bonds 'AA-'.

Fitch also affirms the following ratings:

-- $806.2 million outstanding 2006 series A through D, 2005 series A through H, 2004 series A through I, 2003 series A through G, 2002 series A through G, 2001 series A, and 2000 series C through G class I bonds at 'AAA';

-- $32.7 million outstanding 2006 series A through D, 2005 series A through H, 2004 series A and I, 2003 series B through G, 2002 series A, B, C and D, 2001 series A, and 2000 series C through G class II bonds at 'AA';

-- $140.4 million outstanding 2006 series A through D, 2005 series A through H, 2004 series A through I, 2003 series A through G, 2002 series A through G, 2001 series A, and 2000 series C through G class III bonds at 'AA-'.

The current offering is the 42nd sale issued under a general trust indenture adopted by the corporation on May 1, 2000. The bonds are expected to close on Sept. 7, 2006 through a syndicate led by Lehman Brothers.

The $35 million 2006 series E single-family mortgage bonds are being issued under a supplemental indenture that pledges mortgage revenues, investment earnings, reserves, and other trust funds to secure the bonds. Additionally, the class III bonds are secured by the corporation's general obligation (GO) pledge for payments of scheduled interest and principal at final maturity. The long-term 'AAA' and 'AA' ratings reflect the credit quality of the trust estate's collateral, the adequacy of projected revenues to pay debt service and the credit enhancement provided by the 16% and 10% debt subordination underlying the class I and II bonds, respectively.

The short-term 'F1+' rating on the class I variable-rate demand bonds is based on the liquidity support provided by a standby bond purchase agreement (SBPA) issued by Lehman Brothers Commercial Bank. The SBPA provides for payment of the purchase price of tendered bonds and is sized to cover the principal portion of the purchase price and 186 days of interest at a rate of 12% based on a 360-day year. The short-term rating on the bonds will expire on Jan. 1, 2012, the stated date of the expiration of the SBPA, unless such date is extended or upon any earlier expiration or termination of the SBPA.

The class I variable-rate bonds will be issued with an initial interest rate extending to Sept. 12, 2006. Thereafter, such bonds will be in a weekly interest rate mode but may be converted to a daily, monthly, quarterly, semiannual, auction- or fixed-rate mode. Bond owners have the right to tender their bonds during the daily, weekly, monthly, quarterly, and semiannual rate modes with requisite prior notice. Bonds are subject to mandatory tender on each interest mode change date not less than five days prior to the expiration or termination of the SBPA; for bonds bearing interest at the auction rate, the business day the bonds are to be changed to a different auction mode period; and on the business day bonds are converted to the fixed rate.

Both the class I and II bonds have asset parity maintenance requirements of 113% and 106.5%, respectively, directing revenues to be used to call bonds of that class prior to paying debt service of the next junior class. While the class III bonds are secured by the assets and revenues of the trust indenture, their rating reflects the 'AA-' rating assigned to the creditworthiness of the corporation's GO pledge. The GO rating is based on the corporation's overall financial and portfolio performances, adequate levels of liquidity and excess reserves, and moderate leverage ratios when compared with other state housing finance agencies.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.