OREANDA-NEWS. March 12, 2015. Fitch Ratings affirms the long term rating on the following Alaska Housing Finance Corporation (AHFC, or the corporation) governmental purpose bonds:

-- \\$116.2 million governmental purpose bonds, series 2001 A & B at 'AAA'.

The bonds have a Stable Outlook.

SECURITY

The security for the bonds is primarily the program obligations which consist of the mortgage loans, investments and reserves, and revenues of the program. Additionally, the bonds are general obligations (GO) of AHFC.

KEY RATING DRIVERS

SIGNIFICANT OVER-COLLATERALIZATION: As of Dec. 31, 2014, the program was over-collateralized by 113%. As the indenture is a closed loop, the excess assets are pledged to bondholders.

SOUND FINANCIAL PERFORMANCE: The financial performance is so sound that the rating of the bonds does not rely on the AHFC GO pledge.

ADEQUATE LOAN PORTFOLIO: The loan portfolio is 28% federally insured by the following insurance providers: FHA (11%), VA (7%), RD (3%), and HUD (7%). The uninsured portion or 45% of the portfolio have loan-to-values (LTVs) lower than 80% and the remaining mortgages have private mortgage insurance (27%).

LOAN PORTFOLIO PERFORMANCE: The loan portfolio is performing adequately, with a 60+ day delinquency rate of 1.06% well below state and national averages.

CAPABLE MANAGEMENT OVERSIGHT: AHFC has a well-tenured management staff with a successful history of administering single-family programs.

GEOGRAPHIC CONCENTRATION: Approximately 56% of the loan portfolio lies in the three locations of: Anchorage (36%), Wasilla/Palmer (9%), and Fairbanks (11%).

RATING SENSITIVITIES

REMOTE CREDIT RISKS: Credit risks to the GPB 2001 A/B bonds are remote given the substantial amount of over-collateralization within the program and the closed loop stipulations of the indenture.

CREDIT PROFILE

Financial Performance of the program shows a net interest spread of 60%, and operating margin of 50% and a net income as a percentage of gross income of 30%. All of these ratios validate the sound financial performance of the program.

The 'AAA' rating on the bonds reflects the high amount of over-collateralization, the performance of the loan portfolio, and continued management oversight. As of Dec. 31, 2014, the program's outstanding bonds were primarily secured by \\$29 million in investments and \\$202 million in loans. The loan portfolio is performing adequately, with a 60+ day delinquency rate of 1.06%. The loan portfolio is insured by: FHA (11%), VA (7%), RD (3%), PMI Providers (27%), and HUD (7%). The remaining 45% of the portfolio is uninsured. Credit concerns stem from the geographic concentration of the loan portfolio and Alaska's dependency on the oil industry; however, concerns are largely mitigated through the high levels of over-collateralization within the program.

The bonds are variable-rate bonds which bear interest in a weekly mode. AHFC acts as the liquidity provider for the bonds, utilizing their self-liquidity program which Fitch currently rates 'F1+'. For information regarding AHFC's short-term rating, please see the press release titled, 'Fitch Affirms Alaska Housing Finance Corp.'s Short Term Rating at F1+' dated Feb. 12, 2015 available at 'www.fitchratings.com'.