The Massachusetts Housing Finance Agency will hold a one-day retail order period Tuesday for its $75.7 million sale of tax-exempt Series 2012 new-money and refunding fixed-rate housing bonds through negotiation. The institutional sale is Wednesday.
Barclays Capital is lead manager. Bank of America Merrill Lynch, Citigroup and JPMorgan are co-lead managers. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC is bond counsel, while Nutter McClennen & Fish LLP is representing the underwriters.
MassHousing will use $35.1 million in Series A proceeds to refinance debt related to a dormitory at Northeastern University in Boston and $40.6 million in Series B bonds to benefit six Greater Boston housing projects.
The parity bonds are special obligations of the agency and secured by mortgages and certain cash and investments held under the general resolution MassHousing adopted in 2002.
That resolution permits such loan financings as new and existing single-family and multifamily mortgages.
A MassHousing spokesman said anticipated present savings from the refunding will exceed 4%. According to the spokesman, both series will feature serial bonds from 2012 to 2022 with term bonds in 2027 and 2031, while Series 2012B will also include term bonds in 2042 and 2053.
Fitch Ratings assigned a AA-minus rating and stable outlook to the bonds. Fitch also affirmed the same rating for the $1.55 billion of parity housing bonds as of June 30, 2011.
“The portfolio has exhibited sound performance history with only one mortgage, representing less than 0.1% of the portfolio by loan balance, currently in delinquency,” Fitch said in a report. “MassHousing’s successful history of administering its multifamily housing programs is viewed as a credit strength.”
While the loan portfolio is geographically diverse, its largest concentration is in the Boston area, with about 15% of the outstanding loan balance located in the city itself, according to Fitch. The 10 largest properties represent about 14% of the portfolio balance.
Moody's Investors Service rated the bonds Aa3, citing the program's “strong portfolio composition, solid loan performance, sufficient asset to liability overcollateralization and skilled program management.”
Moody's warned that erosion in the operating performance of multi-family developments could deteriorate the program asset-to-debt ratio, now 1.22, "although this is mitigated by mortgage insurance provisions on one-half of the portfolio and solid overcollateralization levels."
State legislation created MassHousing in 1966. Since making its first loan in 1970, the agency has provided more than $13 billion in financing for the construction and preservation of rental housing, and for loan products for homebuyers and homeowners.