The Maryland Community Development Administration (MCDA) sold $400 million in bonds to refund previously issued securities and finance affordable housing initiatives in the state.
The authority sold the bonds in two series. The tax-exempt Series 2023 E bonds, consisting of $75 million, mature between 2024 and 2054, yielding between 3.6% and 6.25%. The federally taxable Series 2023 Series F bonds, consisting of $325 million, mature between 2024 and 2053, yielding between 5.432% and 6.362%. The securities received a rating of AA+ from Fitch Ratings and Aa1 from Moody’s Investors Service.
The bond proceeds will finance single family housing loans under the state’s residential revenue bond program, which is backed by a portfolio of MCDA-owned mortgage backed securities.
“The Aa1 rating is based upon the strong program asset-to-debt ratio (PADR) of the program, at 1.21x as of June 30, 2022, and the increasing proportion of MBS in the loan portfolio, at approximately 80% as of June 30, 2023,” Moody’s analysts wrote.
The lack of affordable homes in Maryland has driven one-third of the state’s residents to consider moving elsewhere, according to a report by Freddie Mac and the National Association of Realtors. Legislators in both chambers of the state’s legislature are considering bills to increase the supply of affordable housing, though they have not yet yielded substantive reforms.
The MCDA has been a bright spot in Maryland’s efforts to create such housing. The administration has originated almost 4,000 mortgage loans over the past two years, totaling $1 billion in lending. Most of those loans are directed toward first-time homebuyers at low and moderate income levels.
The state of Maryland created the MCDA in 1970 to address a housing shortage. The bonds are special limited obligations of the administration, payable by mortgage revenue.
J.P. Morgan Securities LLC served as lead underwriter on the issuance, purchasing the bonds for par.