The South Dakota Housing Development Authority issued $148 million in bonds to finance affordable housing initiatives.
The authority sold the bonds in two series. The tax-exempt 2024 Series A bonds, consisting of $99 million, mature between 2044 and 2055, yielding between 4.45% and 6.25%. The taxable 2024 Series B bonds, consisting of $49 million, mature between 2036 and 2039, yielding between 5.097% and 5.43%. The securities received a rating of Aaa from Moody’s Investors Service and AAA from S&P Global Ratings.
The authority will spend the bond proceeds on mortgage-backed securities secured by mortgage loans to low- and moderate-income South Dakotans.
Moody’s analysts wrote that their rating reflects the authority’s “strong” financial position as well as it “high-quality loan portfolio, cashflow projections that demonstrate timely debt service payments and a solid management.”
South Dakota is a largely rural state, but advocates say that has not insulated it from the shortage of affordable and available homes that is afflicting the rest of the United States. The midwestern state has a shortage of 11,536 such homes, according to the National Low Income Housing Coalition, a nonprofit that calls for more affordable housing.
The bonds will support the authority’s Homeownership Mortgage Bond (HMB) program, through which it buys mortgage loans and mortgage-backed securities to fund affordable single-family housing.
The bonds are secured by revenue from the HMB program, which can be volatile. The program generated $13.8 million in revenue last fiscal year, lost $76.5 million in FY 2022, and generated $99 million in FY 2020.
BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for $153 million. Caine Mitter & Associates Incorporated acted as financial advisor.