Fitch Downgrades Palmdale CRA Bonds

Fitch Investors Service, a bond-rating agency, said it has downgraded $32.2 million of mortgage bonds issued by the Palmdale Community Redevelopment Agency to A-plus from AA. However, the A-plus rating means Fitch still views the bonds as relatively low-risk, “investment grade” securities.

The 30-year bonds, issued in two series in 1986, are backed by single-family mortgages on houses in Palmdale and certain investments. Fitch said the rating change reflected Fitch’s own recent reorganization more than changes in the Palmdale economic situation.

Since it was bought by an investor group in 1989, New York-based Fitch has reviewed its ratings on thousands of bonds using “more conservative” rating criteria, and that resulted in the Palmdale change, said Fitch spokesman Vincent Barberio.

Nonetheless, Fitch noted that while the mortgage portfolios underlying the bonds “are performing relatively well,” there is risk in having the mortgages concentrated in one relatively small community.