Working amid uncertainty in the equity and fixed-income markets, the Connecticut Housing Finance Authority held an oversubscribed $118 million fixed-rate bond sale.

The authority received more than $350 million in orders on Feb. 6. Retail accounted for $67 million, according to executive director Karl Kilduff.

CHFA was the first state housing financing agency in the U.S. to sell bonds in the post-tax overhaul market.

“In the new lower corporate tax rate environment, there were concerns about investors seeking greater yields,” the authority said in a statement. “However, CHFA saw little to no increase relative to Municipal Market Data and Treasuries.”

Senior manager Bank of America Merrill Lynch was able to reduce the coupons of various maturities between 3 and 10 basis points, which will lower the cost of its program.

Moody’s Investors Service and S&P Global Ratings each rated the bonds triple-A.

Moody’s based its rating on “the high overcollateralization of assets to liabilities, very strong program cash flows, a high percentage of government-insured loans and support from the [state] through the Housing Mortgage Capital Reserve Fund.”

S&P, in its municipal housing outlook, said that while the full impact from the tax act remains uncertain, its effect on demand for housing finance agency mortgage lending is unlikely. S&P said market conditions for bond-financed single-family mortgage lending programs are favorable.

Bond sales, said executive director Karl Kilduff, provide the funds to enable CHFA to offer below-market interest rates on mortgages for buyers with low to moderate incomes who are first-time buyers, or who have not owned a home in three years.

“Lower rates make it a little easier for them to make the leap from renters to homeowners,” said Kilduff.

The authority’s rates range from 3.625% and 3.875% -- for the 1 point option -- compared with the average conventional rate of 4.32%, based on Freddie Mac’s Primary Mortgage Market Survey.

In 2017, CHFA issued $693 million in bonds, providing funding for nearly 3,000 single-family mortgages.

Connecticut lawmakers in 1969 created the authority as a self-supporting quasi-public housing agency charged with expanding affordable housing opportunities for the state’s low- and moderate-income families and individuals.

To date, its combined mortgage financing for CHFA’s single-and multifamily housing programs exceeds $11 billion.

Kutak Rock LLP, Hawkins Delafield & Wood LLP and Lewis & Munday PC were co-bond counsel for the bond sale. Lamont Financial Services Corp. was the financial advisor.

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