The Kentucky Housing Corporation sold $150 million in bonds to finance affordable housing initiatives.
Half of the bonds are tax-exempt and the other half are taxable. The tax-exempt bonds mature between 2025 and 2055, paying interest at rates between 3.25% and 6.25%. The taxable bonds also mature between 2025 and 2055, bearing interest at rates between 4.611% and 6.25%. The securities received a rating of Aaa from Moody’s Investors Service.
Moody’s analysts cited “the strong legal structure and cashflow projections that show the ability to meet all debt service and bond payments under multiple stress scenarios.”
Like many states, Kentucky is experiencing a significant housing shortage, placing pressure on the state to find ways to close the gap between supply and demand. Last month, the corporation co-published a study that identified a shortage of more than 200,000 housing units.
“The housing supply shortage is Kentucky’s most urgent housing issue,” KHC Deputy Executive Director of Housing Programs Wendy Smith said in a press release. “It’s impacting middle-income Kentuckians and poor Kentuckians alike.”
The corporation will use the bonds to finance single-family mortgage loans for low- and moderate-income Kentuckians. Smith said that increasing supply is “key to increasing homeownership rates, lowering housing costs, and reducing housing instability and homelessness.”
The Kentucky General Assembly created the Housing Corporation in 1972 to fund homeownership programs for lower-income residents of the state. The bonds are special, limited obligations of the corporation, payable by revenue from its single-family mortgage program.
BofA Securities, Inc served as lead underwriter on the issuance. Caine Mitter & Associates Inc acted as financial advisor.