Summary: Los Angeles; Single Family Multiple MBS

S&P Global Ratings has lowered its rating nine notches to 'BB+' from 'AA+' on Los Angeles' series 2001A single family home mortgage revenue bonds. At the same time, S&P Global Ratings removed the rating from CreditWatch, where it was placed with negative implications on Feb. 28, 2018. The outlook is stable. Ginnie Mae mortgage backed securities (MBS) and Fannie Mae passthrough certificates secure the bonds. The downgrade reflects our view of the credit's following weaknesses: Asset-to-liability parity below 1.0x at 99.55% as of March 31, 2018; Investment earnings that are insufficient to cover full and timely debt service on the bonds; and Insufficiency of funds to cover reinvestment risk in the event of prepayment, reflecting the 30-day minimum notice period.

...S&P Global Ratings has lowered its rating nine notches to '##+' from '##+' on Los Angeles' series 2001A single family home mortgage revenue bonds. At the same time, S&P Global Ratings removed the rating from CreditWatch, where it was placed with negative implications on Feb. 28, 2018. The outlook is stable. Ginnie Mae mortgage backed securities (MBS) and Fannie Mae passthrough certificates secure the bonds. The downgrade reflects our view of the credit's following weaknesses: + Asset-to-liability parity below 1.0x at 99.55% as of March 31, 2018; + Investment earnings that are insufficient to cover full and timely debt service on the bonds; and + Insufficiency of funds to cover reinvestment risk in the event of prepayment, reflecting the 30-day minimum notice period. These weaknesses are partially offset by the following: + The strong credit quality of the Ginnie Mae MBS and Fannie Mae passthrough certificates, which we consider '##+' eligible; and + Investments held in accordance with a...

Summary