OREANDA-NEWS. Fitch Ratings assigns an 'AA' rating to the following Vermont Housing Finance Agency (VHFA) bonds:

--\$0.6 million VHFA multiple purpose bonds, 2015 series A;
--\$20.5 million VHFA multiple purpose bonds, 2015 series B;
--\$4.4 million VHFA multiple purpose bonds, 2015 series C;
--\$8.5 million VHFA multiple purpose bonds, 2015 series D;
--\$3.9 million VHFA multiple purpose bonds, 2015 series E.

Additionally, Fitch affirms the ratings on approximately \$182.1 million in parity debt (see full list at the end of this release).

The Rating Outlook for all bonds is Stable.

SECURITY

The bonds are general obligations of the agency and are secured by single-family mortgages, multi-family loans, mortgage-backed securities and certain cash and investments held under the resolution.

KEY RATING DRIVERS

STRONG PROGRAM ASSET PARITY RATIO: As of FY 2014 financial statements, the program had 125% asset parity ratio which is sufficient to support the 'AA' rating. Additionally, stressed cash flows illustrate a minimum of 122.5% asset parity ratio under Fitch stressed scenarios.

MODERATELY SOUND PORTFOLIO PERFORMANCE: The portfolio's performance is currently adequate for single- family loans and strong for multifamily loans; mitigating the potential for losses to the program. Additionally, actual loan losses for this program have been minimal (less than 1%) since program inception in 2007.

INDENTURE PROVISIONS: The supplemental indentures allow for program funds to be withdrawn down to 102% asset parity.

RATING SENSITIVITIES

WITHDRAWAL OF ASSETS: The withdrawal of program funds to the legal requirement of 102% would put negative pressure on the rating and may result in a negative rating action.

LOAN PERFORMANCE: Should loan performance deteriorate past current Fitch stresses, rating action may be warranted.

CREDIT PROFILE

The 2015 series A through E bonds are expected to be used to refund approximately \$20.5 million outstanding obligations previously issued under a separate single-family indenture as well as finance the purchase of about \$6.0 -- \$8.5 million mortgage-backed security (MBS) certificates and add \$9.2 million in multifamily loans to the portfolio. In conjunction with the refunding of previously issued debt obligations, the mortgage loans and certificates securing the refunded bonds will be transferred to this indenture.

The aggregate multiple purpose loan portfolio at February 28, 2015 combined with the expected transfers will consist of: 62% single-family whole loans, 26.2% MBS certificates, and 11.8% multi-family loans. The total single-family whole loan portion of the portfolio will contain: 43.9% uninsured (with an 80% LTV or less), 38.8% privately insured (primarily by Mortgage Guaranty Insurance Corporation), 15.3% federally insured (FHA/RD) and 2.0% other. Approximately 8.0% of the single-family loans are delinquent (60+ days) and actual losses in the program have been minimal since inception in 2007.

The multi-family housing loans, which will have an outstanding mortgage balance of \$25.3 million after transfer, are elderly and multi-family developments geographically diversified throughout the state. The loans financed 24 separate multi-family developments consisting of 845 units. Sixteen of the 24 developments are either partially or fully subsidized under Section 8. Currently, there are no delinquencies in the multi-family portfolio.

In addition to the single-family whole loans, the multi-family loans, and the MBS certificates, the program has approximately \$28.3 million in cash and investments which are invested in highly-rated securities at Feb. 28, 2015. As of FY 2014, the program demonstrated an asset parity position of 125%. Under a variety of Fitch stress scenarios, the program demonstrated a minimum of 122.5% asset parity for the life of the bonds. This asset parity is sufficient to support the 'AA' rating on the program given the current composition of the portfolio. Fitch's ongoing credit analysis will be driven by the resolution's actual asset parity position, portfolio composition and performance, financial results, and cash flow strength.

Fitch has also affirmed the following VHFA multiple purpose bonds at 'AA':

--\$19.2 million series 2007 A;
--\$23.3 million series 2007 C;
--\$13.4 million series 2008 C;
--\$2.6 million series 2012 A;
--\$35.3 million series 2012 B;
--\$12.1 million series 2012 C;
--\$6.2 million series 2013 A;
--\$9.2 million series 2013 B;
--\$15.2 million series 2013 C;
--\$ 45.8 million series 2014 A & B.