Investors fell over themselves to buy slices of the Connecticut Housing Finance Authority’s initial batch of $161 million in bonds to fund affordable mortgages for single-family homebuyers – and state borrowers and taxpayers came away winners, officials say.
The quasi-public state agency – CHFA for short – said it sold $116 million of its 2015 Subseries C-1 and C-2 fixed-rate bonds last week.
Yet, CHFA said it drew more than $266 million of orders for its blue-chip fixed-rate bonds – far outstripping the initial sum of debt for sale. What originally was to be a two-day bond sale was accelerated and compressed into one, the authority said, to avoid creating a potential market risk.
Better still, CHFA said the demand allowed CHFA to cut the coupon of various maturities by five to 10 basis points. One hundred basis points equals one percentage point.
The result is that mortgages funded from those bonds proceeds will carry a slightly lower interest rate, the agency said. CHFA’s current rate for qualified first-time homebuyers is 3.5 percent vs. the prevailing national Freddie Mac average rate of 4.04, the agency said.
That may prove to be good news for the remaining $45 million in variable-rate bonds that CHFA says it will sell by Aug. 6, to round out the $161 million issue total.
“This is a clear recognition of CHFA’s creditworthiness, and our mission to alleviate the shortage of affordable housing in Connecticut,” said CHFA Interim Executive Vice President Norbert Deslauriers.
So far this year, CHFA says it has sold about $345 million in bonds to support its housing programs.
Citi is lead senior manager for the fixed-rate offering; RBC Capital Markets is the same for the variable-rate offering.
