Standard&Poor's Ratings Services affirmed its 'AA' issuer credit rating (ICR) on Pennsylvania Housing Finance Agency (PHFA). The outlook is stable. The ICR is based on our opinion of the following strengths: The agency's strong capital adequacy and large loan loss reserves; The very high quality of its investment portfolio; The agency's very strong and large asset base; and Stable and active management team with strong legislative support. Offsetting challenges faced by PHFA, in our opinion, include the following: Declines in both net interest margin and return on asset figures; Sizeable (44%) exposure to variable-rate debt; and Rising, but relatively low, levels of delinquencies and foreclosures due to general weaknesses in the economy and real estate market. At the
