The Michigan State Housing Development Authority sold $424.7 million in bonds to finance affordable housing initiatives.
The authority issued the bonds in three series. The tax-exempt 2024 Series A bonds, consisting of $248.3 million, mature between 2024 and 2054, paying interest at rates between 3.1% and 6%. The federally taxable 2024 Series B bonds, consisting of $126.3 million, mature between 2024 and 2050, bearing interest at rates between 5.078% and 5.867%. The federally taxable 2024 Series C bonds, consisting of $50 million, mature in 2054 and carry interest at a variable rate. The securities received a rating of Aa2/VMIG 1 from Moody’s Investors Service and AA+/A-1+ from S&P Global Ratings.
The rating is “supported by ample liquidity for immediate obligations, pledge of multiple debt payment sources, including a state-backed reserve fund, and proactive management team,” Moody’s analysts wrote.
Like many states, Michigan is looking to increase its supply of housing to contend with a shortage of affordable and available homes. The Michigan State Housing Development Authority estimates that the state needs almost 200,000 more housing units—and it is the one of the largest agencies tasked with closing that gap.
The bond proceeds will fund the authority’s affordable housing programs, including single-family mortgage loans and down payment assistance loans.
The bonds are general obligations of the authority, backed by its full faith and credit.
Barclays Capital Inc served as lead underwriter on the issuance. CSG Advisors Incorporated acted as financial advisor.