The Minnesota Housing Finance Agency issued $225 million in bonds to finance affordable housing initiatives.
The agency sold $150 million in taxable bonds and $75 million in tax-exempt term bonds. The taxable bonds mature between 2025 and 2055, paying interest at rates between 4.468% and 5.958%. The tax-exempt bonds mature in 2055 and bear interest at 6.25%. The securities received a rating of Aa1/VMIG 1 from Moody’s Investors Service and AA+/A-1+ from S&P Global Ratings.
The agency will use the issuance proceeds to fund its single-family mortgage lending program, which finances affordable mortgages for low-and moderate-income Minnesotans.
The rating reflects the “program’s over-collateralization and cash flow capable of withstanding S&P Global Ratings-projected loss assumptions, liquid reserves that are sufficient to cover short-term disruptions in asset cash flows, and market position characteristics generally in line with the national housing market,” S&P analyst Aulii Limtiaco said in a press release.
The issuance will support Minnesota’s efforts to provide more affordable homes as the state confronts a shortage of housing. Minnesota has a deficit of 106,00 housing units, 72,00 of which are in the Twin Cities, according to the Housing Affordability Institute, a nonprofit based in the state that is affiliated with the homebuilding industry.
The bonds are general obligations of the Housing Finance Agency, payable by its revenue.
RBC Capital Markets, LLC served as lead underwriter on the issuance. CSG Advisors Incorporated acted as financial advisor.