Bangkok--25 Jan--Standard & Poor's
Standard & Poor's Ratings Services has assigned its 'AA-' issuer credit rating (ICR) to the Chicago Housing Authority (CHA), Ill. Click here to access the report.
At the same time, Standard & Poor's also assigned its 'AA-' rating to CHA's $25 million taxable revenue bonds, series 2010 (Build America Bonds-direct payment to the issuer). The series 2010 bonds are special obligations of CHA backed by the full faith and credit of CHA. Bond proceeds will be used to pay capital costs for energy savings and efficiency improvements, to fund a debt service reserve fund sized at one year maximum annual debt service, and to pay the cost of issuance. CHA expects to receive a subsidy payment from the U.S. Treasury equal to 35% of the interest payable on the series 2010 bonds on or after each interest payment date. CHA expects that energy savings as a result of the financed improvements will provide additional revenue and, with all other pledged revenue, support debt service payments.
"The rating reflects CHA's strong management over the last 10 years evidenced by a trend of improvement in overall operational performance, portfolio quality, and financial management," said Standard & Poor's credit analyst Valerie White. CHA is the third largest public housing authority in the country, with almost 18,000 units and 37,000 housing choice vouchers throughout the city of Chicago. CHA is a designated Moving to Work (MTW) public housing authority under the Department of Housing and Urban Development program.
The stable outlook is based on our view of CHA's very strong liquidity ratios, increasing net working capital position, and growing trend of profitability margins. The outlook also reflects the strength of the authority's capital adequacy position, in our opinion, at the 'AA-' rating level. Standard & Poor's views CHA's management and clear directive strategic plans to maximize its position in the Chicago market as key contributing factors to the rating. Current and future market demand for low-income housing far outweighs CHA's existing and planned portfolio--evidencing a strong need for this segment of the housing market. A key factor to maintaining the rating, however, will be CHA's ability to maintain its financial position once the contracted subsidy amount under its Moving to Work contract is no longer a fixed number subject only to appropriations. We believe that a continued decline in federal subsidy without CHA having the ability to maintain and/or increase additional leveraged resources, its net working capital, and/or its profitability position could, in the long term, impair the authority's financial strength and have a negative credit impact.
RELATED RESEARCH
General Criteria: Enhanced Methodology And Assumptions For Rating Government-Related Entities, June 29, 2009
USPF Criteria: U.S. Public Housing Authority Issuer Credit Rating, Nov. 13, 2007
Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Valerie White, New York (1) 212-438-2078
Mikiyon Alexander, New York (1) 212-438-2083
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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[email protected]
Americas Customer Service: (1) 212-438-7280
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