A report to be released today by Standard & Poor's Rating Services indicates that hundreds of affordable housing projects across the country are hurting from low interest rates, according to an article leading the business section of today's edition of The New York Times by Diana B. Henriques.
"These borrowers," the article said, "primarily affordable housing projects across the country that are allowed to raise money in the tax-exempt bond market, had been relying on the interest they earned on their spare cash to help them pay off their outstanding bonds. Like other investors, they are now earning far less on those cash reserves than ever anticipated. As a result, their bond ratings are being cut sharply, reducing the value of their bonds to investors and potentially making affordable housing less available or more expensive for senior citizens and low-income families who rely on such projects for shelter."
"The magnitude of the pain," the article said, "is clear in the report from Standard & Poor's...of a sweeping review of nearly 600 tax-exempt housing bonds. The changes are stark. The number of AAA-rated bonds, the blue chips of the bond market, fell by more than half, to 271 from 552. The number of bonds in the 'junk' category - too low to be considered investment grade - rose to 46 from just 9, and the agency said it anticipated that 10 of those issues could default over the next decade."
"These borrowers," the article said, "primarily affordable housing projects across the country that are allowed to raise money in the tax-exempt bond market, had been relying on the interest they earned on their spare cash to help them pay off their outstanding bonds. Like other investors, they are now earning far less on those cash reserves than ever anticipated. As a result, their bond ratings are being cut sharply, reducing the value of their bonds to investors and potentially making affordable housing less available or more expensive for senior citizens and low-income families who rely on such projects for shelter."
"The magnitude of the pain," the article said, "is clear in the report from Standard & Poor's...of a sweeping review of nearly 600 tax-exempt housing bonds. The changes are stark. The number of AAA-rated bonds, the blue chips of the bond market, fell by more than half, to 271 from 552. The number of bonds in the 'junk' category - too low to be considered investment grade - rose to 46 from just 9, and the agency said it anticipated that 10 of those issues could default over the next decade."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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