The Community Development Administration of the Maryland Department of Housing and Community Development today brings to market $150 million of residential revenue bonds.
The bond proceeds will be used to make or buy mortgage loans and be deposited into the CDA’s reserve fund.
The issue consists of $100 million of tax-exempt bonds and $50 million of bonds subject to the alternative-minimum tax. About $2.9 million, or 2%, of the bond proceeds will go toward the reserve fund.
Moody’s Investors Service assigned a rating of Aa2 to the tax-exempt bonds and a rating of Aa2/VMIG1 to the taxable bonds. Moody’s gave the issue a stable outlook. Payment on the bonds is on parity with about $2.1 billion of residential revenue bonds as of last April, Moody’s said.
The CDA has issued $262 million of variable-rate debt hedged under multiple swaps with UBS, Bear, Stearns & Co., and Merrill Lynch as of December, Moody’s said.
While hedging the debt through swaps involves risks, the administration’s “strong management of its swap portfolio should help to mitigate these risks,” the Moody’s rating report said.
The rating agency said the CDA’s strengths were a solid asset-to-debt ratio, a loan delinquency and foreclosure rate below the statewide Federal Housing Authority average as of March 31, and a well-cushioned reserve. However, a severe economic downturn could however drive up delinquencies, Moody’s said.
Bond counsel is Ballard Spahr Andrews & Ingersoll LLP. The financial adviser on the sale is Caine Mitter & Associates Inc.