ATLANTA - The South Carolina State Housing Finance and Development Authority yesterday moved forward with a $45 million mortgage revenue bond deal that was delayed last week as HFDA officials waited to see the outcome of housing stimulus legislation in the U.S. Congress.
President Bush yesterday signed the legislation into law. The key for housing authorities like the HFDA is the provision in the new law that exempts housing bonds from the alternative minimum tax. The new law also gives states an additional $11 billion of capacity for housing bonds under the private activity bond cap. The legislation allows for proceeds of tax-exempt bond sales to be used for low-income rental housing. Provision is also made for the temporary refinancing of subprime mortgages.
Goldman, Sachs & Co., is the book-runner. The McNair Law Firm is bond counsel.
The deal is made up of $22 million of Series 2008B-1 bonds that are not subject to the AMT and $23 million of Series 2008B-2 bonds that are subject to the AMT. The Series 2008B-1 bonds are term bonds that mature in 2031, 2035, and 2039. The Series 2008B-2 bonds have maturities from 2010 through 2018. There are term bonds that mature in 2023 and 2027
Portions of the Series 2008A and Series 2008B bonds will be used to refund notes issued in 2007.
Tracey Easton, the general counsel for the HFDA, said their revised plan called for a retail order period yesterday and then for the deal to be opened up to institutional investors today.
"Last week, the authority was closely watching the housing stimulus package and determined it would be in our best interest to wait since passage of the bill seemed imminent and could result in better mortgage rates for South Carolina residents," Easton said.
HFDA director Valarie Williams said proceeds from the deal will be used to refund a portion of the outstanding notes issued in 2007. The balance of the principal amount of the notes will be refunded with a portion of the proceeds of the authority's current 2008 deal, she added.
The HFDA has roughly $632 million of mortgage revenue bonds outstanding. Over the past 10 years, its annual issuance has been sporadic. For example, last year it sold about $110 million of bonds in four issues. The number of annual issues during that period has been as high as 12, which was in 2001.
So far this year, the agency has sold $7.9 million in new-money bonds and $20 million in a combination of new-money and refunding bonds, according to Thomson Reuters.