Date: April 19, 2004

Standard and Poor’s upgrades MHDC issuer credit rating to AA+

Standard & Poor’s upgraded the issuer credit rating on Missouri Housing Development Commission from ‘AA’ to ‘AA+’ in a report released by the agency March 31.

In the report, S&P based its findings on the very low-risk profile of the commission’s asset base; very strong and stable financial performance and minimal general obligation debt exposure. The agency stated the upgrade reflects directly on the continued strong and capable management of the organization; continued state support, while maintaining sufficient autonomy to meet the commission’s legislative mandate; and the diverse economic base of the state and ‘AAA’ rated state economy. They reported that “the stable outlook reflects the continued strong financial performance supported by high asset quality and strong management.”

MHDC becomes only the third housing finance agency to achieve a ‘AA+’ rating, joining Virginia and Minnesota. West Virginia’s housing finance agency has a ‘AAA’ rating.

“It is very gratifying that the Commission’s operations and mission are looked upon so highly by Standard and Poor’s,” said Gary Collins, Commission chair. “It positively validates the decisions we have made in the past regarding the most effective means of financing affordable housing for the people of Missouri. We are always concerned about balancing the best possible methods of providing housing with a stable financial approach.

The Commission has increased its access to affordable housing financing through limited obligation offerings primarily backed by ‘AAA’ eligible mortgage backed securities (MBS). MHDC’s conservative loan portfolio, coupled with high-quality investments, places minimal risk upon the commission’s fund balances. S&P noted that MHDC had experienced slower growth in assets in 2003, compared to prior years, due to significant loan prepayment; but, they did not view the low profitability ratios as a problem due to the high quality of the commission’s assets. The credit report noted that the continued trend of increased leverage ratios reflected the commission’s strength. MHDC’s total equity to total assets was 16.9 percent, up from 15.33 percent at fiscal year-end 2002.

As one of Standard & Poor’s housing finance agency with top-tier designation since 1987, MHDC “consistently demonstrates superior performance in all areas considered for this distinction.” Areas considered include:
 

Standard & Poor’s noted the Commission’s aggressiveness in seeking ways to both increase new housing stock in the state and to preserve, through rehabilitation, older housing communities. They specifically wrote that the state’s support for the commission is demonstrated through MHDC’s autonomy, independence, and through its collaborative efforts with the state, especially with the Department of Economic Development. In 2003, the state’s department of economic development, which is responsible for bond allocation within Missouri, allocated an additional $70 million in bond capacity to MHDC for affordable housing preservation.

As the state's housing finance agency, MHDC is dedicated to strengthening communities and the lives of Missourians through the financing, development and preservation of affordable housing. The Missouri Housing Development Commission was established by the 75th General Assembly in 1969. Since that time, MHDC has encouraged and assisted in the production of affordable rental housing and provided homeownership opportunities for thousands of families.

It has invested almost $4 billion in Missouri housing, covering every county of the state, for rental housing developments, home mortgages, home improvement loans, loans to landlords for renovations, grants to neighborhood housing groups and other programs.

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