Wisconsin Housing & Economic Development Authority's Series 2018 A-C Housing Revenue Bonds Rated 'AA'; Outlook Is Stable

NEW YORK (S&P Global Ratings) Dec. 6, 2018--S&P Global Ratings assigned its 
'AA' rating to Wisconsin Housing & Economic Development Authority (WHEDA's) 
series 2018A, 2018B, and 2018C  housing revenue bonds, issued under the 
authority's 1974 multifamily parity indenture. At the same time, S&P Global 
Ratings affirmed its 'AA', 'AA/A-1+', and 'AA/A-1' ratings on all other issues 
outstanding under the authority's parity resolution. The outlook is stable. 

"The rating reflects our view of the strength of the housing bond resolution, 
the solid financial strength of the housing revenue bond resolution, and the 
authority's strong portfolio oversight," said S&P Global Ratings credit 
analyst Ki Beom Park. "Partially offsetting these strengths, in our view, are 
the counterparty and contingent liquidity risks due to the use of 
variable-rate debt and associated hedges and increased construction lending 
activities that could increase credit enhancement required."

Although supported by WHEDA's general obligation pledge (AA/Stable), we rate 
the bonds based on the quality of pledged collateral under the resolution, 
rather than their degree of reliance, if any, on WHEDA's general funds. 
According to preliminary documentation, the 2018ABC bond proceeds will fund 
permanent mortgage and construction loans secured by multifamily housing 
projects. WHEDA has a plan to sell the 2018 series B and C bonds directly to 
an institutional investor through a private placement.

The stable outlook reflects our anticipation that the seasoned portfolio of 
mortgage loans will be stable, and our view of WHEDA's oversight and 
management of the bond program. The outlook also reflects our view of the 
portfolio's continued very low delinquencies and the stable asset-to-liability 
parity. 

We could raise the rating if overcollateralization for the resolution 
continues to grow and loan performance remains strong. 

We could lower the rating if WHEDA's loan performance deteriorates and 
delinquencies increase, or the portfolio's debt service coverage declines to 
less than 1.1x. If WHEDA withdraws funds from the resolution to a level that 
we believe would lead to a decline in overcollateralization to less than loss 
coverage at the 'AA' level, we could lower the rating.