The Colorado Housing Finance Authority will price $125 million of bonds in its first deal to bear an outside "social bond" opinion.
The agency will price $82 million of fixed-rate bonds on Wednesday and $43 million on Jan. 20, with closing on Jan. 22. The bonds are issued in three series and include taxable tranches of fixed and variable rate.
Kestrel Verifiers, a U.S. based, Climate Bonds Initiative approved verifier, provided its opinion on the Colorado bonds.
“We are seeing increasing demand for verified green, social and sustainability bonds. Having an accredited external reviewer like Kestrel qualify deals helps to avoid greenwashing or 'social-washing' and can give both the primary and secondary market greater confidence in the green or social credentials of deals,” said Cory Hoeppner, managing director and head of housing at RBC Capital Markets, senior manager and book runner on the deal.
Barclays is co-senior manager in a syndicate that includes four other firms.
Kestrel verified that the bond program supports United Nations goals for sustainable development, reduced inequalities and increased access to financial services.
The 2021 ABC Mortgage Loans will include loans within the authority’s FirstStep Program and other qualified single family programs. FirstStep offers financing to low- and moderate-income households, including individuals who are first-time home buyers, qualified veterans, or who are purchasing a residence in a targeted area.
Kestrel noted that the 2021 ABC mortgage loans will also be made available for the benefit of minority populations who are historically underrepresented as homeowners, borrowers with disabilities, borrowers who care for individuals with disabilities, as well as households in lower income areas and areas of chronic economic distress.
A third of the 2021 ABC Mortgage Loans will be made to households in targeted areas. A targeted area is defined as a census tract in which 70% of families have incomes which are less than 80% of the statewide median family income or an area of chronic economic distress.
The bonds are being issued as Class 1 bonds with ratings of triple-A from Moody’s Investors Service and S&P Global Ratings with stable outlooks.
“The Aaa rating on the Class I bonds reflects the bond program's strong portfolio composition, solid loan performance, significantly strong and growing asset to liability overcollateralization levels as well as skilled program management,” Moody’s said.
The 2021 ABC Mortgage Loans will include loans within the authority’s FirstStep Program and other qualified single family programs. FirstStep offers financing to low- and moderate-income households, including individuals who are first-time home buyers, qualified veterans, or who are purchasing a residence in a targeted area.
Kestrel noted that the 2021 ABC mortgage loans will also be made available for the benefit of minority populations who are historically under-represented as homeowners, borrowers with disabilities, borrowers who care for individuals with disabilities, as well as households in lower income areas and areas of chronic economic distress.
A third of the 2021 ABC Mortgage Loans will be made to households in targeted areas. A targeted area is defined as a census tract in which 70% of families have incomes which are less than 80% of the statewide median family income or an area of chronic economic distress.
Affordable housing is a major issue in Colorado, which has seen property values soar even amid the economic stress and layoffs of the pandemic.
On July 14, the National Low Income Housing Coalition released its annual report documenting the gap between renters’ wages and the cost of rental housing across the nation.
The report concludes that the economic downturn spurred by the coronavirus further increases the risk of housing instability for millions of low-wage renters who were struggling to make ends meet before the pandemic.
The report calculates the “Housing Wage” a full-time worker must earn to afford a rental home without spending more than 30% of their income on housing costs. This year’s national Housing Wage is $23.96 per hour for a two-bedroom home at fair market rent and $19.56 per hour for a modest one-bedroom rental home.
In no state, metropolitan area, or county can a full-time, minimum-wage worker afford a modest two-bedroom rental home, and that same worker can afford a modest one-bedroom rental home in only 5% of U.S. counties.
