During a day of turmoil in the markets Wednesday, the Connecticut Housing Finance Authority was oversubscribed by 2.5 times and sold $157.7 million of housing mortgage finance program bonds.

"It was a very interesting day, to say the least," vice president for finance Hazim Taib said, laughing, on Thursday.

No one was laughing Wednesday as the agency navigated through fear in the equity markets. The Dow Jones Industrial Average was down as many as 440 points Wednesday before ending at a 178-point loss. In addition, there was a rally in the treasury market, with the 10-year dipping its toes below 2%.

Rocky Hill, Conn.-based CHFA received $412.7 million of orders for $157.7 million of bonds, according to Taib. Morgan Stanley led the sale. Lamont Financial Services Corp. was the financial advisor.

CHFA expects the new-money subseries D-1 to fund nearly 600 mortgages for first-time homebuyers. Subseries D-2 will refund some debt. Moody's Investors Service and Standard & Poor's assigned triple-A ratings and stable outlooks.

"Overall, we accomplished our primary objective by selling all bonds while achieving full spread, which in turn allows CHFA to continue to provide below market interest rates," said Taib.

He said the authority was still able to reduce the rate between five and 10 basis points on some bonds, depending upon the maturity.

"The credit spread was wider than I would have liked, but from an absolute yield standpoint, CHFA got a great rate," said Taib. For comparison, he said, a 2034 maturity spread on the previous Series 2014C sale to Municipal Market Data was 75 at 3.8%. On Wednesday, it was 86 at 3.3%, or savings of 50 basis points.

Wednesday's sale was the fourth this year for the authority, which intends to sell two series of multifamily housing bonds in November. Its August sale of $123 million in tax-exempt bonds was oversubscribed and generated more than $400 million in orders on one day.

"It's important to be in the market regularly," said Taib. "The familiarity helps."

State lawmakers created the agency in 1969 as a self-supporting, quasi-public housing agency charged with expanding affordable housing opportunities for low- and moderate-income persons statewide. To date, the combined mortgage financing for CHFA's single- and multifamily housing programs has exceeded $11 billion, according to the agency.

The authority on Thursday lowered its interest rate for first-time homebuyers from 3.375% to 3% for 30 year mortgages, said Taib.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.