Fitch Rates Maryland CDA Resi Rev Bonds, Series F ‘AA/F1+’

Proquest LLC

The following is from Fitch Ratings on Sept. 05:

Fitch Ratings assigns an 'AA/F1+' rating to the $25,000,000Community Development Administration, Maryland Department of Housing and Community Development (Maryland CDA) residential revenue bonds, series F (federally taxable) (variable rate).

The Rating Outlook is Stable for the long-term rating.

KEY RATING DRIVERS:

The long-term 'AA' rating is based on: the sufficient overcollateralization in the residential revenue bond program; the insurance composition of the portfolio; and the well-tenured management team which has a long and successful history of administering the single family program. The long-term rating is also based on the fact that the program is highly concentrated with 45 percent of the underlying mortgages for homes in and around the city of Baltimore. The short-term 'F1+' rating is based on the liquidity support provided by State Street Bank (rated 'A+/F1+', long-term rating on Positive Outlook by Fitch) in the form of a Standby Bond Purchase Agreement (SBPA). For more information on the long-term rating, see the press release 'Fitch Rates Maryland CDA's Residential Revenue Bonds 2014 Series C-E 'AA', Outlook Stable' dated Sept. 4, available on Fitch's website at fitchratings.com.

The SBPA provides for the payment of the principal component of purchase price plus an amount equal to 189 days of interest calculated at a maximum rate of 12 percent, based on a year of 360 days for tendered bonds during the daily rate, weekly rate, monthly rate, quarterly rate, and semiannual rate (variable rate modes) in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The SBPA will expire on Nov. 14, 2017, the stated expiration date, unless such date is extended; upon conversion to a mode other than a variable rate mode; or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of the Maryland CDA residential revenue bonds which result in an automatic and immediate termination. The short-term 'F1+' rating will expire on the expiration or prior termination of the SBPA. The remarketing agent for the bonds is Bank of America Merrill Lynch. The bonds are expected to be delivered on or about Sept. 25.

The bonds will be issued in the weekly rate mode, but may be converted to a daily, monthly, quarterly, semiannual, indexed, or fixed rate. While bonds bear interest in the weekly rate mode, interest is paid each year on March 1 and September 1, commencing March 1, 2015. Holders of bonds bearing interest in the variable rate modes may tender their bonds for purchase with the requisite prior notice. The tender agent is obligated to make timely draws on the SBPA to pay purchase price in the event of insufficient remarketing proceeds, and in connection with the expiration or termination of the SBPA, except in the case of the credit-related events permitting immediate termination or suspension of the SBPA.

Funds drawn under the SBPA are held uninvested and are free from any lien prior to that of the bondholders. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate to a mode other than the weekly rate mode; (2) upon expiration, substitution or termination of the SBPA; and (3) following the receipt of written notice from the bank of an event of default under the SBPA, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.

Bond proceeds will be used to purchase certain 2014 Series F refinance loans under the CDA's residential revenue bond resolution.

RATING SENSITIVITIES:

The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the Maryland CDA residential revenue bonds. The long-term rating is exclusively tied to the creditworthiness of the Maryland CDA residential revenue bonds and will reflect all changes to that rating.

Additional information is available at fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria', February 24,;

--'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support', January 27.

Applicable Criteria and Related Research:

Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support

http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=730736

U.S. Municipal Structured Finance Criteria

http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=736618

Additional Disclosure

Solicitation Status

http://fitchratings.com/gws/en/disclosure/ solicitation?pr_id=865754