NEW YORK --In today's turbulent housing market, Housing Finance Agencies (HFAs) are facing significant challenges related to their portfolio performance. As a result, cash flow analysis has become one of the most important tools in determining an HFA's portfolio performance and strength of bond programs. Moreover, cash flow analysis is critical to making informed decisions because it provides a framework for identifying, quantifying, and evaluating market factors, regulatory requirements, and policy needs.
"Effective cash flow analysis can help HFAs manage their bottom lines by maximizing a portfolio's financial health through the use of complex modeling of variable-rate debt, swaps, recycling, cross-calling, and addressing rating agency requirements," said Standard & Poor's Ratings Services credit analyst Debra Boyd.
At a recent conference on affordable housing hosted by Standard & Poor's in San Diego, Calif.,(bottom left photo) Ms. Boyd moderated the e-panel session, "Tools Of The Trade—Get With The Cash Flow," which focused on how cash flow management techniques can maximize the financial health of HFAs, and ways to assess and determine risks and benefits to the cash flows' bottom line.
Patricia Hippe, deputy commissioner of the Minnesota Housing Finance Agency (logo top left) discussed how her agency is using cash flows to improve its bottom line. "One of the biggest uses of cash flow analysis is to monitor parity across indentures and to identify debt service shortfalls and look for potential sources for coverage of those shortfalls," she said. "You want to get as much money out of the program as you reasonably can," she said. "We also use cash flow analysis extensively when assessing the agency's capital adequacy."
Jeremy Obaditch, principal consultant for CFX Inc., said that cash flow analysis is used to an
swer key questions that senior management might have in determining the strategic direction of their agency--such as the volume the agency will handle, the number of loans it is going to make, and the amount of taxable debt to issue. "The purpose of cash flow analysis is to give agencies the strategic tools to make decisions in an informed way, while avoiding the duplication of efforts of others within the organization," he said.
Jeremy Obaditch, principal consultant for CFX Inc., said that cash flow analysis is used to an
swer key questions that senior management might have in determining the strategic direction of their agency--such as the volume the agency will handle, the number of loans it is going to make, and the amount of taxable debt to issue. "The purpose of cash flow analysis is to give agencies the strategic tools to make decisions in an informed way, while avoiding the duplication of efforts of others within the organization," he said. Gene Slater, chairman of CSG Advisors, said that agencies must have a robust cash flow model that includes assets, liabilities, scenario assumptions, and electronic linkages to external databases. "It's really important to bridge the gap from traditional accounting to capital valuations," he said.
According to Ms. Nandini Natarajan, financial analyst at Caine Mitter & Associates, cash flow analysis can measure the impact of various events on an agency's financial strength and show how these events shape future net worth. "In the end, however, cash flows are only as good as the data that goes into them," she said.
Writer: Frank E. Benassi
Media Contact:
Media Contact:
Christopher Mortell ,
New York, (1) 212-438-3446
Analyst Contacts:
Debra Boyd,
Debra Boyd,
San Francisco
(1) 415-371-5098
Wendy Dolber,
Wendy Dolber,
New York (1) 212-438-7994
No comments:
Post a Comment