The Colorado Housing and Finance Authority sold $150 million in bonds to fund affordable housing initiatives in the state.
The authority sold the bonds in three series. The tax-exempt Series 2023 O bonds, consisting of $22.5 million in term bonds, mature on May 1, 2054, and yield 6.5%. The taxable 2023 Series P-1 bonds, consisting of $87.2 million, mature between 2026 and 2054, yielding between 5.521% and 6.5%. The taxable 2023 Series P-2 bonds, consisting of $40.3 million, mature on May 1, 2050 and pay interest at an adjustable rate. Moody’s Investors Service assigned the securities ratings of Aa3, Aaa, and Aa2/VMIG1, respectively. S&P Global Ratings assigned respective ratings of AA, AAA, and AA+/A-1+.
“We expect the portfolio composition, the solid overcollateralization and active management of Colorado Housing to protect the bond program from possible loan losses throughout all but the most severe real estate downturns,” Moody’s analysts wrote.
The issuance comes amid statewide efforts to boost the stock of affordable housing. In August, Colorado Governor Jared Polis issued an executive order aimed at speeding up the loan and grant process for housing projects to 90 days. The process can currently take more than twice as long. The executive order followed the approval by Colorado voters of Proposition 123, which dedicated 0.1% of state income tax revenue, equal to hundreds of millions of dollars, to affordable housing.
Supporters of affordable housing say those initiatives will aid in reducing a shortage of affordable housing in Colorado. The state needs to produce 325,000 units to stabilize housing prices, according to a housing task force formed by the Colorado legislature last year. The task force noted that the state currently builds an average of fewer than 40,000 units per year.
The bond proceeds will finance the purchase of mortgage-backed securities.
Jefferies LLC served as lead underwriter on the issuance.