The Delaware State Housing Authority sold $125 million in bonds to finance affordable housing initiatives in the state.
The bonds mature between 2025 and 2055, paying interest at rates between 3.4% and 6%. They received a rating of Aa1 from Moody’s Investors Service.
The bonds will support the authority’s single-family mortgage program, which is aimed at financing affordable housing for low- and moderate-income residents of Delaware.
“The Aa1 rating reflects that the program will continue to maintain satisfactory financial performance,” Moody’s analysts wrote.
The issuance comes amid a housing shortage in Delaware that has led the authority to call for far more investment in affordable homes. A report commissioned by the authority last year found that Delaware will need to add nearly 25,000 new units by the end of the decade to keep up with household growth. The same report found that half of Delaware’s renters are cost-burdened.
The authority will use the bond proceeds to purchase mortgage-backed securities. These bundles of mortgages consist primarily of certificates with zero interest rate, according to Moody’s. By purchasing these securities, the authority incentivizes issuers to provide them to prospective homebuyers, who may not otherwise be able to afford mortgages.
The bonds are special obligations of the authority, payable by mortgage loans and other securities in its portfolio.
J.P. Morgan Securities LLC served as lead underwriter on the issuance. CSG Advisors Incorporated acted as financial advisor.