Coming off its inaugural social bond issuance, the Rhode Island Housing and Mortgage Corp. expects to issue $82 million of multifamily development bonds on Wednesday.
RIHousing’s negotiated sale, which will include a same-day retail component, consists of $47.5 million of Series 2-T federally taxable social bonds, $23.7 million of Series 1-A exempt sustainability bonds; and $10.8 million of Series 1-B exempt sustainability bonds.
J.P. Morgan Securities is lead manager.
In September, RIHousing issued $142 million of social bonds, or homeownership opportunity bonds. Proceeds financed affordable home loans and down payment assistance to low-to-moderate income first-time homebuyers in Rhode Island.
Social bonds raise funds for new and existing projects that address or mitigate a specific social issue and/or seek to achieve positive social outcomes. Their designation reflects bond proceed use in a manner consistent with International Capital Markets Association principles and mapped to United Nations' Sustainable Development Goals.
“What we do with our first-time homebuyers really aligns with social-bond principles that are out there,” said chief financial officer Kara Lachapelle. “Home ownership is a wealth generator for some people.”
Rhode Island’s legislature created RIHousing in 1973 to provide financing for affordable housing for families with low or moderate incomes. Being in the nation’s smallest state has its advantages, according to Lachapelle.
“You can drive from one end of the state to the other in about an hour,” she said.
In addition to its bond programs, RIHousing administers the Section 8 Housing Assistance Program, the home investments partnership program and the federal low-income housing tax credit, as well as other state and federal programs.
RIHousing also launched an investor relations website powered by Boston-based technology firm BondLink.
“Transparency is so important these days,” Lachapelle said.
The agency has roughly $1.2 billion of bonds outstanding, with little variable-rate debt.
Moody’s Investors Service rated the bonds and all RIHousing outstanding parity debt Aa2, with a stable outlook.
Moody’s cited the program's strong financial position and large proportion of Federal Housing Administration risk-sharing insurance in the portfolio, which offsets the risk related to uninsured loans and second lien loans within the program.
“Housing finance agencies have been around for quite a long time,” Lachapelle said. “For RIHousing, we focus on longevity for the agency and the bond program.”
Like many housing agencies nationwide, RIHousing adjusted on the fly as the COVID-19 crisis escalated. “We felt we did a very good job adjusting to the pandemic,” Lachapelle said. Outreach, she said, included online classes, tutorials and video presentations.
Closing date is Jan. 27. Hawkins Delafield & Wood LLP is bond counsel. Locke Lord LLP is special counsel and Kutak Rock LLP is representing the underwriters.