Fitch Ratings is renaming its public finance housing group to the Community Development and Social Lending Group to better reflect the broader scope of lending that supports social missions.
"Tax-exempt bonds will continue to make up a fair amount of debt offerings in the sector, however we have seen an uptick in taxable sustainability and social impact bonds in the last 14 months,” said Mikiyon Alexander, Fitch senior director and sector lead of the group.
Nearly $27 billion of affordable housing bonds were issued from June 2020 to March 2021, Fitch said, of which about $7.5 billion were taxable, sustainability or social impact offerings. In the first quarter, around $6.8 billion of housing bonds were sold, of which $875 million were sustainability or social impact bonds and $827 million were taxable, according to Fitch.
Community development financial institutions have become more common in the municipal bond space since the first CDFI applied for a bond rating in 2015, according to Fitch. By the second quarter of 2020, CDFIs had accessed the muni market with rated offerings totaling $1.05 billion.
“It's important to be at the forefront of the industry's evolution and be properly poised to provide timely, reliable credit opinions and research,” Alexander said.
In addition to rating bonds, Fitch’s CDSL group issues environmental, social and governance relevance scores for the credits it rates, including social impact and community investment financings.
Fitch said it rated its first CDFI in June 2020, assigning its AA rating and stable outlook to the Century Housing Corporation in California, along with its subsequent series 2020 $100 million taxable sustainability bond issuance and $50 million sustainable impact notes.
The rating agency says its criteria enable it to rate community development entities such as affordable housing, student housing, military housing, public housing authorities, capital fund financings and community impact credits, in addition to housing finance agencies, housing finance loan programs and community development financial institutions.
