The struggling housing market needs to look to every possible financing source. So, how are housing bonds doing?
According to our sister publication, The Bond Buyer, housing bonds were off last year. But in a small victory, they were not off as much as the entire market.
Housing bonds totaled $9.1 billion last year, down from $9.9 billion in 2010, according to Thomson Reuters data published in The Bond Buyer. That's down 8%. But the whole long-term municipal bond market was off even farther, down 32%.
Housing bonds are used mainly by public entities like state housing finance agencies, which use them to support discounted mortgages to low income- and first-time home buyers.
Surprisingly, the number of issues actually increased last year, to 334 from 330, indicating some strength in the market.
The New England and Mid-Atlantic region thoroughly dominated the list of biggest issuers last year New York City and state offerings took six of the top ten offerings last year (the largest, for $260 million in multifamily bonds, was by the New York State Housing-Finance Mortgage Agency). Connecticut, Pennsylvania and Virginia entities rounded out the top 10.
The fourth quarter was the strongest, with $4 billion in bonds issues, down by 7% from 2011. The sector managed a 10% gain in the second quarter, while the biggest loser was the third quarter, down 25%.
Bank of America Merrill Lynch was the biggest underwriter, at $1.4 billion. It was followed by JP Morgan at $1.25 billion and RBC Capital Markets, at $1.2 billion. These three issuers were the only ones to crack the $1 billion mark.
Single-family bonds outpaced multifamily, by $5.6 billion to $3.5 billion. The majority of issues was in the tax-exempt category, at $7.4 billion. Taxables came in at $1.2 billion and minimum-tax bonds at $500 million.
New-money issues dominated last year, at $8 billion. Refundings were at $730 million and combined issues totaled $386.5 million. Fixed-rate bonds dominated variable rates, with $7 billion in issuance.
State agencies dominated issuance, at almost $8 billion. Local authorities issued $1 billion in bonds. Tribal governments did not issue any housing bonds, matching the 2010 number.
One thing that hurt the housing bond market last year was the end of stimulus bonding. That category went to zero from $157 million in 2010. Continued low interest rates don't help, either, as Standard & Poor's Corp. has pointed out recently.
