Minnesota Housing Finance Agency — Moody’s assigns Aa1 to MN HFA

Rating Action: Moody’s assigns Aa1 to MN HFA – Resi. Hous. Fin. Bds 2022 Series C; outlook stableGlobal Credit Research – 24 Feb 2022New York, February 24, 2022 — Moody’s Investors Service has assigned a Aa1 rating to Minnesota Housing Finance Agency’s (Minnesota Housing or MHFA) approximately $100 million Residential Housing Finance Bonds, 2022 Series C (Non-AMT) (Social Bonds). We are also maintaining all Aa1 ratings on approximately $1.9 billion of outstanding Residential Housing Finance Bonds (RHFB or Program) parity debt. The outlook is stable.RATINGS RATIONALEThe Aa1 rating assignment is based on the general obligation pledge of Minnesota Housing Finance Agency (Aa1/Stable) with further support from the pledged assets, and the financial performance of the RHFB program.RATING OUTLOOKThe stable outlook reflects the strong financial position of MHFA and its general obligation pledge.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING- Upgrade of Minnesota Housing’s issuer rating- Maintenance of strong Program financial position and whole loan performance, in conjunction with continued addition of mortgage-backed securities (MBS) in the portfolioFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING- Downgrade of Minnesota Housing’s issuer rating, combined with substantially deteriorated Program financial performance and performance of the whole loans in the portfolioLEGAL SECURITYThe bonds are general obligations of Minnesota Housing. The bonds are further secured by a pledge and a grant of security interest in all bond proceeds, mortgage loans, MBS, investments, revenues and other assets (other than the Alternative Loan Fund) held under the RHFB.USE OF PROCEEDSProceeds of the 2022 Series C Bonds, along with proceeds from the 2022 Series D Bonds (to be rated in the near future), will be used to purchase MBS (including Uniform Mortgage-Backed Securities) backed by mortgage loans for low-and-moderate income residents of Minnesota.PROFILEMinnesota Housing is an agency of the state of Minnesota, created in 1971 and authorized to issue bonds to further affordable housing in the state. The Agency has no taxing power. The Residential Housing Finance Bonds resolution was established in 1995. Bonds were issued to finance single family mortgage loans to moderate-and-low income families in the state. As of January 31, 2021, there were $1.9 billion of RHFB bonds outstanding.METHODOLOGYThe principal methodology used in this rating was US Housing Finance Agency Issuer Ratings Methodology published in October 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1154472. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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