OREANDA-NEWS. S&P Global Ratings lowered its issuer credit rating (ICR) on Philadelphia Housing Authority (PHA), Pa. to 'A+' from 'AA-'. The outlook is stable.

"The downgrade reflects the operating losses reported by PHA for the past three fiscal years from 2013 to 2015," said S&P Global Ratings credit analyst Raymond Kim.

We based the rating on PHA's stand-alone credit profile (SACP), which we rate 'a+'. The moderate likelihood of extraordinary government support to PHA, does not affect the SACP, pursuant to our government-related entities criteria.

The rating reflects our view of the following credit weaknesses:Weak financial performance resulting in operating losses in 2013, 2014, and 2015, due to reductions in federal subsidies and declining net income;A declining EBITDA-to-revenue ratio, and high leverage ratio compared with those of its domestic peers; andPHA's strong reliance on federal funding streams, which put its federal operating fund subsidies and federal capital fund grant income at risk. The ratings also reflect the following credit strengths:PHA's very high liquidity ratios and strong asset base; andIts designation as a Moving-to-Work public housing authority by the U. S. Department of Housing and Urban Development (HUD).PHA provides housing and related services to approximately 80,000 low - and moderate-income residents in developments and scattered sites in Philadelphia. It owns and operates over 14,100 family and senior housing units in 79 developments and administers more than 18,000 housing choice vouchers. It remains a highly essential housing source for lower-income individuals and families.

The stable outlook reflects PHA's strong liquidity ratios and high asset base, which we believe will provide stability in the medium term. PHA's liquidity score is a '1', the highest possible score. However, based on its financial statements, its financial performance ratios have declined.

Should the authority's financial performance continue to decline, we could lower the authority's SACP and, potentially, the ICR.

Improvement in the authority's liquidity and EBITDA-to-revenue ratios could result in a higher SACP and ICR.