Fitch has identified five key rating drivers that affect the credit quality of SHFA general obligations:
--Financial Resources: Sufficiency of financial resources, including leverage, capital base, and profitability to enable the agencies to fulfill their public service mission;
--Portfolio Risk Profile and Revenue Volatility: Asset quality assessment and the potential loss exposure are important measures that may affect the overall profitability over time;
--Debt Structure: Overall debt structure and key structural features including interest rate fluctuations, counterparty risks, and replacement liquidity factors are considered;
--Liquidity and Investments: Measurement of overall liquidity position in terms of total investments as a percentage of assets and review of the quality of investments are important in Fitch's assessment in meeting financial obligations;
--Management and State Government Relationships: Proven program management experience along with favorable financial oversight is viewed favorably. The degree to which a state may request funds from the SHFA could constrain the rating.
The updated criteria report outlines how Fitch evaluates these risk factors in its rating analysis of SHFA GOs . The report further summarizes the indicative financial performance that Fitch would expect by rating category. The updated criteria should be read in conjunction with the 'Revenue-Supported Rating Criteria' report published
Additional information is available at 'www.fitchratings.com'.
Source: Fitch Ratings
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