OREANDA-NEWS. Fitch Ratings has published a sector-specific report for rating state housing finance agency (SHFA) general obligation (GO) creditworthiness.

The report identifies factors considered by Fitch in assigning ratings to SHFA GO within the scope of the criteria. No changes to the ratings of existing GOs are anticipated as a result of the publication of the rating criteria.

Fitch has identified four key rating drivers that affect the credit quality of SHFAs general obligations:

Sufficiency of Financial Resources:

Fitch reviews an agency's leverage ratios, capital base and profitability margins to measure and evaluate the quality and stability of a SHFA's financial resources. The financial ratios facilitate comparison of an SHFA's financial performance and position with those of its peers in the public finance housing industry.

SHFA Risk Profile:

The risks associated with a SHFA's bond programs, including asset, debt and operational risks; create potential volatility to the agency's revenue stream. Fitch assesses the impact that those risks may have on the overall financial health of the SHFA and the impact, if any, on the SHFA's ability to honor its GO pledge commitments.

Programmatic Oversight:

Fitch considers the level of programmatic oversight provided by the SHFA. The strength of oversight capabilities may affect the degree to which a SHFA identifies and corrects programmatic, financial or economic problems to protect the agency's long-term credit quality. Strong management will result in more consistent financial performance.

Government and Agency Relationships:

A SHFA's ongoing relationship with the state's executive and legislative branches is taken into consideration when assessing the agency's ability to maintain excess funds in its general fund. State governments have periodically requested various amounts from the respective SHFA's excess funds. These transfers, depending on the amount and timing, may have an immediate and negative effect on an agency's overall creditworthiness.

The criteria report outlines how Fitch evaluates these factors in its rating analysis of SHFA's general obligations.