The Texas Department of Housing and Community Affairs sold $250 million in bonds to finance affordable housing initiatives.
The department issued $150 million in tax-exempt bonds and $100 million in taxable bonds. The tax-exempt bonds mature between 2025 and 2054, paying interest at rates between 3.95% and 6%. The taxable bonds also mature between 2025 and 2054, bearing interest at rates between 4.676% and 6%. The securities received a rating of Aaa from Moody’s Investors Service and AA+ from S&P Global Ratings.
The department will use the issuance proceeds to fund its mortgage revenue bond program, which involves purchasing mortgage backed securities to fund down payment and closing cost assistance for low- and moderate-income Texans.
“The Aaa rating reflects that the program’s strong financial position will continue,” Moody’s analysts wrote.
The Texas legislature created the department in 1991 to act as a conduit for federal grant funds for housing and community services, tasks that require it to operate as the state’s housing finance agency. It has used bond proceeds to finance $1.9 billion worth of first lien loans over the past three years, assisting more than 8,500 households, according to the official statement accompanying the sale of the bonds.
The bonds are limited obligations of the department, secured by mortgage revenue.
Ramirez & Co, Inc served as lead underwriter on the issuance, purchasing the bonds for $258.3 million. The price reflected a premium of $8.3 million. Stifel, Nicolaus & Co, Inc acted as financial advisor.