Minnesota Housing Finance Agency — Moody’s assigns Aa1 to MN Housing’s Rental Housing Bonds 2021 B; outlook stable

Rating Action: Moody’s assigns Aa1 to MN Housing’s Rental Housing Bonds 2021 B; outlook stableGlobal Credit Research – 16 Mar 2021New York, March 16, 2021 — Moody’s Investors Service has assigned an Aa1 rating to the proposed $8.8 million of Minnesota Housing Finance Agency’s (Minnesota Housing, or the Agency) Rental Housing Bonds, 2021 Series B (Non-AMT). We have also maintained Aa1 ratings on all outstanding parity debt. The outlook is stable.RATINGS RATIONALEThe Aa1 rating is based on the general obligation pledge of Minnesota Housing Finance Agency (Aa1; outlook stable), further enhanced by the strong financial performance of the Rental Housing Bonds (RHB) program.We regard the coronavirus (COVID-19) outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action. We do not see any material immediate credit risks for the Agency and the RHB program. However, the situation surrounding Coronavirus is rapidly evolving and the longer-term impact will depend on both the severity and duration of the crisis. If our view of the credit quality of the Agency or the RHB program changes, we will update the rating and/or outlook at that time.RATING OUTLOOKThe stable outlook reflects the strong financial position of Minnesota Housing and its general obligation pledge.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING- Upgrade of Minnesota Housing’s issuer ratingFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING- Downgrade of Minnesota Housing’s issuer rating, combined with substantially deteriorated program financial performanceLEGAL SECURITYThe 2021 B Bonds are general obligations of Minnesota Housing, and further secured by a pledge of revenues and assets under the RHB Resolution which include bond proceeds, mortgage loans, investments, revenues and other assets.USE OF PROCEEDSProceeds of the 2021 B Bonds will fund a short-term first-lien bridge loan for acquisition and construction of a multifamily housing development to be known as Element in Plymouth, MN. The bridge loan is expected to be repaid from tax credit equity and one long-term end loan from MN Housing. The bridge loan will not be credit enhanced.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 Rental Housing Bonds resolution was established in 1988. Bonds were issued to finance multifamily rental developments to further promote affordable housing in the state. As of 11/30/2020, there were $44 million of bonds outstanding under the RHB program.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. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. 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