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Fitch Rates Alaska HFC's $142.9MM Mtg Rev Bonds 2010 A, 2010 B and 2009A-1 'AAA'

NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns a 'AAA' rating to the $142.9 million Alaska Housing Finance Corporation's (AHFC) mortgage revenue bonds as follows:

--$42.9 million 2010 series A;

--$35.7 million 2010 series B;

--$64.4 million 2009 series A-1.

Fitch also affirms the following ratings:

--$14.6 million 1998 series A1 and A2 at 'AAA';

--$56.2 million 1999 series A1 and A2 at 'AAA';

--$48.9 million 2000 series A and C at 'AAA';

--$47.9 million 2001 series A and B at 'AAA';

--$128.7 million 2009 series A at 'AAA'.

The Rating Outlook for the bonds is Stable.

Rating Rationale:

--The long-term 'AAA' rating reflects the strong credit quality of the Alaska Housing Finance Corp.'s (AHFC, or the corporation) mortgage revenue bond program's (the program) underlying collateral; as of July 31, 2010, approximately 44% of the portfolio was made up of FHA-insured loans, 18% were backed by the U.S. Department of Veterans Affairs (VA), 4% by private mortgage insurers (PMI), and 12% by U.S. Department of Agriculture Rural Development Program (RD) insurance, and the remaining 21% are uninsured first lien mortgages with original loan-to-value ratios (LTVs) equal to or less than 80%.

--There is also strong credit support provided by an AHFC-supplied special reserve fund (SRF) totaling about $13.1 million in loans and investments.

--The bonds are also general obligations of AHFC (rated 'AA+' by Fitch), which offers an additional layer of credit support.

--AHFC continues to report stable financial results and a superior financial position.

--A statutory change effective in fiscal 2003 reduced the corporation's transfer-plan payment to the state to a declining annual amount beginning in fiscal 2007.

Key Rating Drivers:

--AHFC's strong management and financial flexibility to address market changes and challenges provides support to rating maintenance.

--The geographical concentration (nearly two-thirds of the loans are located in the city of Anchorage) puts the portfolio at risk in the case of a major natural disaster.

--Alaska's real estate market is vulnerable to the state's oil-dependent economy.

Security:

The 'AAA' rating on the bonds reflects the the quality of the pledged collateral (primarily the mortgage loan portfolio and debt service reserve fund), the sufficiency of projected revenues to meet debt service requirements, the credit support provided by a special reserve fund which significantly increases the level of available assets and/or revenues to support debt service requirements, and the corporation's strong management as well as the general obligation pledge. All the bonds issued under this indenture are general obligations of the corporation.

Credit Summary:

The bonds are the 12th and 13th series of bonds to be issued under a master trust indenture, which pledges mortgage revenues, investment earnings, reserves, and other funds; the bonds are also general obligations of the corporation. For this and the prior series of bonds issued under the master indenture, the authorizing supplemental indentures also require funding of a special reserve fund for supplemental mortgage coverage on loans not covered by a mortgage pool insurance policy.

Additional information is available at 'www.fitchratings.com'

In addition to the sources of information identified in the U.S. Municipal Structured Finance Rating Criteria/Tax-Supported Rating Criteria/Revenue-Supported Rating Criteria.

Applicable Criteria and Related Research:

--'State Housing Finance Agencies General Obligation Rating Criteria', dated April 6, 2009;

--'State Housing Finance Agencies - Single-Family Mortgage Program Rating Guidelines', dated Nov. 26, 2008.

Applicable Criteria and Related Research:

State Housing Finance Agencies General Obligation Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=431758

State Housing Finance Agencies - Single-Family Mortgage Program Rating Guidelines

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=416066

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

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