The Michigan State Housing Development Authority issued $428.4 million in bonds to finance affordable housing initiatives in the state.
The authority sold the bonds in three series. The tax-exempt 2023 Series B bonds, consisting of $286 million, mature between 2024 and 2054, yielding between 3.5% and 5%. The taxable 2023 Series C bonds, consisting of $107.4 million, mature between 2026 and 2053, yielding between 5.393% and 6.061%. The taxable 2023 Series D bonds consist of $35 million and yield a variable rate, with an expected mandatory tender on April 1, 2026. The Series B and Series C bonds received a rating of Aa2 from Moody’s Investors Service and AA+ from S&P Global Ratings; the Series D bonds received the same long-term ratings and a short-term rating of VMIG 1 from Moody’s Investors Service and A-1+ from S&P Global Ratings.
The long-term rating is “based on the strong legal structure and the high credit quality of the investments securing the bonds,” Moody’s analysts wrote. The short-term rating is based on cash flow projections that will “be sufficient for full and timely debt service payments,” according to the ratings agency.
The issuance comes amid a statewide push by activists for a so-called renters’ bill of rights. Among other initiatives, such a bill would require Michigan to allow local governments to impose caps on rent. Michigan is one of 31 states without rent control laws. The state has made some efforts to increase its stock of affordable housing in recent years, though activists warn that without permanent changes, low-income renters will continue to struggle.
The bonds will finance the acquisition of new single-family mortgage loans and down payment assistance loans. The measures are expected to alleviate the burden on low- and moderate- income homebuyers.
The authority issued an additional $315 million in bonds earlier this year.
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.