Fannie Mae prepares the first social bond backed by affordable housing loans

By David Bell

NEW YORK, Jan. 20 (IFR) – Fannie Mae prepares an initial US $ 315 million social bond offering backed by loans on multi-family properties that provide affordable housing to low to moderate income households,

The agreement, Fannie Mae GeMS 2021-M1S series, is led by Morgan Stanley and is expected to be reviewed this week.

The guarantee consists of 26 loans guaranteed by properties in California, Florida and Texas that provide affordable housing and meet the social bond component of the agency’s Sustainable Bond Framework, which was released in November of the year. last.

The agency’s framework allows for the issuance of durable mortgage-backed securities classified as either green, social or sustainable.

Fannie Mae has already issued a lot of green bonds in the space, linked to energy efficient buildings. It issued $ 75 billion in green multi-family mortgage-backed securities from 2012 to 2019, and last year priced its first green bond deal backed by newly built, energy-efficient single-family homes.

But this is his first offer under the new criteria of social obligation.

The social criteria of its framework include goals such as enabling the financing of affordable housing, providing capital to underserved groups and supporting the financing of vulnerable groups such as those affected by natural disasters or global pandemics.

The agency notes on its website that it provided $ 30.5 billion in financing for affordable rental housing for low to extremely low income renters in 2019.

Fannie Mae’s new US $ 314.78 million offering consists of a US $ 33.5 million “A-1” tranche with a weighted average life of six years and an “A” tranche. -2 ”of 281.28 million US dollars with a WAL of 9.62 years.

Morgan Stanley was also the sole underwriter of an initial Freddie Mac Social Bond offering in September last year, which repackaged Freddie’s equity notes in a pool of US $ 141 million multi-family loans issued by IMPACT Community Capital, a San Francisco-based investment manager. that invests in underserved communities.

The co-managers of the Fannie transaction are BMO Capital Markets, JP Morgan and Ramirez & Co.

(Reporting by David Bell; Editing by Jack Doran)

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