The saga of Americas’ first security backed by rents generated single family rental homes took another fascinating turn this week as Blackstone, the private equity giant seeking to open up a new asset class, smacked head on into the ratings agencies that put a kibosh on the idea a year ago only to learn at least one of them, Fitch, hasn’t changed it’s mind.

Blackstone began marketing the bond Wednesday, with some 300 potential investors expected in New York to peruse the nearly $480 million deal. Monday it will hit the road Boston on Thursday and Los Angeles on Friday, with the offering expected to be officially announced on Monday.

The collateral behind the deal is rental cash flow from 3,207 foreclosed single-family homes bought up by Blackstone, a private equity firm, in the wake of the financial crisis. Blackstone said nearly 90 percent of the homes underpinning the ABS are located in and around Phoenix, Arizona; Riverside, Los Angeles and Sacramento, California; Atlanta, Georgia; and Tampa, Florida.

A AAA Rating?

The $500 million transaction from Invitation Homes, a wholly owned Blackstone subsidiary, will be rated by Kroll, Morningstar and Moody’s, and will receive at least one Triple A rating. Blackstone announced yesterday it would receive a AAA rating… and with that announcement the latest chapter in this story became even more interesting. (See The Rush to Securitize Single Family Rentals.)

That at least one of the ratings will be Triple A shocked some investors relying on numerous rating agency reports over the past year that indicated a first-time REO-to-rental deal would never reach a rating higher than Single A.

“Almost every rating agency came out with criteria reports or commentaries this year saying an inaugural …read more