Program Performance Results
Over its 20-year history, the Credit Enhancement Program has earned $101.3 million for the Fund. At calendar year-end 2013, CEP commitments totaled $1.2 billion, a decline of approximately 28 percent from the previous year, and the annual net fee income was $10.5 million, approximately a 15 percent decrease over the 2012 level. The lower total figures for 2013 reflect staff’s decision to suspend new underwriting because of heightened credit risk and an unfavorable risk/reward profile. This decision was discussed and announced at the Investment Committee meeting on September 10, 2013. While the CEP has not suffered any losses, staff has an unfavorable view of the operating environment (e.g., municipal obligors’ ongoing fiscal stress, declining variable rate bond volumes, low credit enhancement fees) which has caused us to curtail underwriting new business.