Fitch Rates Utah Housing's $35MM 2008 Series D Bonds

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned the following ratings to Utah Housing Corporation's (the corporation) 2008 series D single-family mortgage bonds:

--$25.1 million class I variable-rate bonds 'AAA/F1+';

--$4.7 million class I fixed-rate bonds 'AAA';

--$1.2 million class II bonds 'AA';

--$4.0 million class III bonds 'AA-'.

The current offering is the 11th sale issued under a general trust indenture adopted by the corporation on May 1, 2007. The bonds are expected to close on June 26, 2008. The bonds are being issued under a supplemental indenture that pledges mortgage revenues, investment earnings, reserves, and other trust funds to secure the bonds.

Additionally, the class III bonds are secured by the corporation's general obligation (GO) pledge for payments of scheduled interest and principal at final maturity. The long-term 'AAA' and 'AA' ratings reflect the credit quality of the trust estate's collateral, the adequacy of projected revenues to pay debt service and the credit enhancement provided by the initial 16.5% and 11.8% debt subordination underlying the class I and II bonds, respectively.

The short-term 'F1+' rating on the class I variable-rate demand bonds is based on the liquidity support provided by a standby bond purchase agreement (SBPA) issued by Wells Fargo Bank (rated 'AA/F1+' by Fitch). The SBPA provides for payment of the purchase price of tendered bonds and is sized to cover the principal portion of the purchase price and 188 days of interest at a rate of 12% based on a 360-day year for the tax exempt variable rate bonds and 188 days of interest at a rate of 15% based on a 360-day year for the taxable variable rate bonds. The short-term rating on the bonds will expire on June 30, 2013, the stated date of the expiration of the SBPA, unless such date is extended, or upon any earlier expiration or termination of the SBPA.

The 2008 series D-1 class I variable-rate bonds (AMT) will be issued on June 26, 2008 with an initial fixed interest rate which extends to, but does not include, July 1, 2009 which is also the Initial Mandatory Tender Date. After the Initial Mandatory Tender, the bonds are expected to be in the weekly rate mode but may be converted to a daily, monthly, quarterly, semiannual, auction- or fixed-rate mode. The swap related to the 2008 series D-1 class I variable-rate bonds (AMT) begins on July 1, 2009.

The 2008 series D-2 class I variable-rate bonds (Taxable) will be issued in a weekly interest rate mode but may be converted to a daily, monthly, quarterly, semiannual, auction- or fixed-rate mode.

Bond owners have the right to tender their bonds during the daily, weekly, monthly, quarterly, and semiannual rate modes with requisite prior notice. Bonds are subject to mandatory tender on each interest mode change date and not less than five days prior to the expiration or termination of the SBPA; for bonds bearing interest at the auction rate, the business day the bonds are to be changed to a different auction mode period; and on the business day bonds are converted to the fixed rate.

Following this bond sale, approximately 44% of the bonds outstanding under the indenture will be in the variable-rate mode and 100% will be swapped to a synthetic fixed rate with one counterparty, Lehman Brothers Derivative Products Inc. (rated 'AAA' by Fitch).

The class I and II bonds have asset parity maintenance requirements of 111.5% and 105%, respectively, directing revenues to be used to call bonds of that class prior to paying debt service of the next junior class. While the class III bonds are secured by the assets and revenues of the trust indenture, their rating reflects the 'AA-' rating assigned to the creditworthiness of the corporation's GO pledge. The GO rating is based on the corporation's overall financial and portfolio performances, adequate levels of liquidity and excess reserves, and moderate leverage ratios when compared with other state housing finance agencies.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Contacts

Fitch Ratings, New York
Maura McGuigan, +1-212-908-0591
Kasia Reed +1-212-908-0389
Christopher Kimble, +1-212-908-0226 (Media Relations)