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South Dakota Sells $235 Mln in Housing Bonds

By Munichain News Desk

The South Dakota Housing Development Authority issued $235 million in bonds to fund mortgages for low- and moderate-income homebuyers in the state.

The authority sold the bonds in four series, including $175 million in tax-exempt bonds and $60 million in federally taxable bonds. The tax-exempt bonds mature between 2024 and 2055, yielding between 3.55% and 6.25%. The taxable bonds mature between 2024 and 2054, yielding between 5.38% and 6.01%. The securities received a rating of Aaa from Moody’s Investors Service and AAA from S&P Global Ratings.

The bond proceeds will support the authority’s homeownership mortgage bond program.

“The Aaa ratings are based on the Program’s strong financial position, evidenced by an asset-to-debt ratio (PADR) of 1.25x and a 21% operating margin as of fiscal year 2022, in addition to a high-quality loan portfolio and solid management,” Moody’s analysts wrote.

Housing shortages in South Dakota echo those across the United States. Amid rapidly rising rents, many low-income residents are spending a greater percentage of their income on housing costs. The state has a shortage of more than 10,000 affordable and available rental homes for extremely low-income South Dakotans, according to the National Low Income Housing Coalition, a nonprofit which advocates for affordable housing initiatives.  

The bonds are limited obligations of the authority, secured by pledged assets and revenue from a portfolio of mortgages and other loans.

Wells Fargo Bank, NA, served as lead underwriter on the issuance.

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