OREANDA-NEWS. Fitch Ratings affirms the long-term ratings on the following Alaska Housing Finance Corporation (AHFC or the corporation) mortgage revenue bonds:

--$153.92 million mortgage revenue bonds, 2009 series A-1 & A-2 at 'AAA';
--$65.125 million mortgage revenue bonds, 2010 series A & B at 'AAA';
--$64.235 million mortgage revenue bonds, 2011 series A & B at 'AAA'.

The Rating Outlook on the bonds is Stable.

SECURITY

The security for the bonds is primarily the program obligations of mortgage loans, investments, reserves, and revenues of the program. Additionally, the bonds have credit support from AHFC's special reserve fund and are general obligations of AHFC (rated 'AA+', Outlook Stable).

KEY RATING DRIVERS

SUFFICIENT PROGRAM OVER-COLLATERALIZATION: As of June 30, 2014, the program had asset parity of 116%.

STRONG LOAN PORTFOLIO: The loan portfolio is 57% federally insured by the following insurance providers: FHA (25%), RD (16%), HUD 184 (10%), and VA (6%). Additionally, the loan portfolio is performing adequately, with a 60+ delinquency rate of 2.2%.

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

INDENTURE PROVISIONS: In addition to the strong primary insurance requirements of the indenture, the various supplemental indentures require funding of a special reserve fund for all mortgages that do not have pool insurance which provides an additional layer of credit support.

GEOGRAPHIC CONCENTRATION: Approximately 66% of the loan portfolio lies in the three locations of: Anchorage (38.9%), Wasilla/Palmer (16.6%), and Fairbanks (10.6%).
RATING SENSITIVITIES

UNANTICIPATED LOAN LOSSES: Although the likelihood of this is remote given the strong presence of federal insurance and current performance of the loan portfolio, any unanticipated loan losses could deteriorate program over-collateralization levels and put negative pressure on the rating.

CREDIT PROFILE

The 'AAA' rating on the bonds reflects the over-collateralization on the bonds, the robust indenture provisions, the strong performance on the loan portfolio, and the presence of federal insurance on the loan portfolio. As of Aug. 31, 2015, the loan portfolio is performing adequately with a 60+ delinquency rate of only 2.2%. The loan portfolio is insured by the following providers: FHA (24.9%), RD (16.0%), HUD 184 (10.4%), and VA (6.1%). Additionally, 8.8% of the portfolio is insured by various primary mortgage insurers and the remaining 33.8% is uninsured.

According to indenture provisions, only mortgages with a loan to value of 80% or lower are permitted to be uninsured which mitigates concerns over potential loan losses from the uninsured portion of the loan portfolio given the large amount of equity in these loans. Credit concerns stem from the geographic concentration of the loan portfolio and Alaska's dependency on the oil industry; however, these concerns are largely mitigated through the program's over-collateralization levels and strength of the underlying loan portfolio.