Reinvestment Fund is the largest CDFI to be rated by the international rating agency
Philadelphia, October 9, 2015 — Reinvestment Fund announced today that it has received a AA issuer credit rating from Standard & Poor’s Rating Services (S&P). Reinvestment Fund is the largest community development financial institution (CDFI) to receive an S&P rating, and one of only a handful to date. This rating is a powerful recognition of Reinvestment Fund’s strong track record of meeting its financial commitments through the strategic investment of capital to revitalize struggling communities.
“The AA rating reaffirms Reinvestment Fund’s financial strength and business discipline,” said Don Hinkle-Brown, President and CEO of Reinvestment Fund. “We have always received the top rating from Aeris, the CDFI industry rating system. The S&P rating takes us a step further by contextualizing our strength within a financial assessment framework that is widely understood and accepted. It is a significant achievement as we work to reach capital resources that are unfamiliar with us and our industry.”
The AA rating is globally recognized by investors as a signal of creditworthiness. It offers Reinvestment Fund a common language with which to communicate to investors, and has the potential to open new capital markets to the organization. Reinvestment Fund relies on investments to support its financing activity aimed at catalyzing change in distressed communities that do not have access to traditional capital sources. However, some potential investors avoid financing community development projects because of the perceived risk involved. The strong, investment-grade credit rating—the same type of rating that is given to traditional businesses—helps these investors understand Reinvestment Fund and lowers barriers for engagement. This also enables large financial institutions to more easily identify opportunities to fulfill their Community Reinvestment Act requirements.
S&P determines a credit rating by evaluating how both market and institutional risk affect revenue generation and ability to service debt. S&P’s assessment of Reinvestment Fund included a careful analysis of the organization’s earnings quality and stability, financial strength, asset quality, debt levels and types, and overall strategic management. While S&P emphasized financial performance and strategic management during its rating process, it also took into account Reinvestment Fund’s 30 years of impact. Reinvestment Fund’s strong records of social impact were an indication of effective management and risk-mitigation—both important criteria in S&P’s evaluation.
“The rating reflects our view of Reinvestment Fund’s minimal loss exposure, which can be absorbed through its reserves and unrestricted equity,” said S&P’s credit analyst Mikiyon Alexander, “and extremely low-risk debt profile.”
Reinvestment Fund is particularly grateful to its current 850 diverse investors, who have had confidence in its ability and mission long before having a conventional rating. Since Reinvestment Fund’s founding 30 years ago, its investors have supported the deployment of over $1.5 billion through nearly 3,000 community investments across the country. In 2014 alone, Reinvestment Fund provided a record $169 million in financing—the most it has ever loaned and invested in a single year.
The AA credit rating will facilitate new partnerships with investors—thereby equipping The Reinvestment Fund to build on its successes, pioneer valuable innovations in community development finance, and continue to expand its impact through strategic investment that increases opportunity and wealth for people and places in need nationwide.
The report summary can be viewed on Reinvestment Fund’s website.