Standard and Poors Rating Services has raised its issuer credit rating on the Arkansas Development Finance Authority (ADFA) and its series 2006W (Warehousing Program), which is supported by the authority’s general obligation (GO) pledge, to ‘AA-’ from ‘A+’. This rating is based on the following strengths:

• Continuous increase in profitability over the past five years;
• Strong financial performance comparable with other housing finance agencies (HFA’s) in the ‘AA-‘ category;
• An asset base that continues to be very high quality and low risk, which therefore reduces risk to fund balances;
• An experienced management team; and
• A stable state economy and ADFA’s ongoing ability to meet its legislative mandate.

ADFA President Mac Dodson said, "This is an objective indication of the market’s comfort with ADFA’s Bond Programs."

Standard & Poors credit ratings have achieved wide investor acceptance as easily usable tools for differentiating credit quality. Under present commercial bank regulations issued by the Comptroller of the Currency, bonds rated in the top four categories (‘AAA’, ‘AA’, ‘A’, ‘BBB’, commonly known as investment-grade ratings) generally are regarded as eligible for bank investment.

ADFA is the primary bond-issuing authority in Arkansas. In addition to issuing affordable housing debt, the authority issues debt for economic development programs and acts as a conduit issuer for various other non-housing related activities. This analysis excludes non-housing activities of the authority except to the extent that such programs affect ADFA’s general fund. Generally, the non-housing activities increase the authority’s ability to earn revenue, without adding to its risk profile as a housing agency.

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