Fitch Ratings Affirms Illinois Housing's GO Debt Pledge at 'A+'.Business Editors NEW YORK--(BUSINESS WIRE)--May 13, 2004 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 three fiscal years, primarily due to the lower interest rate environment. For 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, 2003, 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 6.8 times (x), placing it slightly above the moderate level range for state housing finance agencies (HFAs). The Fitch fitch: see polecat. preliminary 2003 median adjusted debt-to-equity ratio dropped to 6.4x based on 48 agencies reporting. IHDA's total outstanding debt decreased $100 million from the prior year to approximately $1.8 billion. Additionally, IHDA has $111 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 $87 million in the prior year. IHDA's aggregate risk sharing loss exposure to the MPCs is $86 million in 2003 compared to $66 million in 2002. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in fiscal years 2001, 2002, and 2003 were 8.1%, 2.5%, and (.2)%, respectively, falling significantly in 2002 and 2003 due to reduced interest income as a result of declining interest rates and increased expenses. Returns on assets and equity also declined and are now at levels below the medians for HFAs. Unaudited financial statements for the six months ended Dec. 31, 2003 indicate a continued negative trend in financial performance following the fiscal 2003 results. However, as of Dec. 31, 2003, IHDA's financial position, reflected by further declining leverage ratios, remains near the moderate level range for state HFAs. The authority's $2.3 billion of assets (all proprietary funds) consist of program loans (59%), short-term investments (19%), and long-term investments (18%). 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 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 strong management capabilities. A full report detailing IHDA's GO pledge is available on the Fitch Ratings web site at 'www.fitchratings.com'. |
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