OREANDA-NEWS. State housing finance agencies (SHFA) have seen steady declines on balance sheets and leverage over the last 20 years, while equity positions have grown and profitability has remained strong, according to a new Fitch Ratings report.

'The changing economic environment following the Great Recession dramatically altered the SHFA landscape and its financial trends. Since FY 2010, aggregate loan portfolios held on the balance sheet have declined 11.4%. This change is attributable to the current economic environment and the shift in SHFAs' business model in response to the lending environment,' said Ryan Pami, Associate Director.

SHFAs' leverage ratios have steadily declined, and median debt-to-equity ratios have decreased to 3.8x in FY 2013 from 8.3x in FY 1995 due to muted debt issuance and strong equity growth.

Total SHFA equity has increased to \$26.9 billion in FY 2013 from \$10.2 billion in FY 1995 as a result of strong growth within SHFA housing programs leading to sustained profitability at the agency level throughout the years, and revenues generated from direct sales of MBS in recent years.

Median net interest spread increased to 24.5% in FY 2013 from a low of 18.4% in FY 1995, bolstered by many SHFAs economically refunding debt, which has lowered overall bond interest costs.