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.

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.
Paul Burton

Paul Burton

Paul Burton is the Northeast Regional Editor for The Bond Buyer and the author of the book "Tales from the Newsrooms." He is a sought-after public speaker and has appeared on radio and TV shows, including former CBS News White House correspondent Sharyl Attkisson’s public-affairs program, “Full Measure.”