Century Housing issued its $85 million sustainability bond in the municipal market in order to ensure a more flexible investor base, as it is a market more accustomed to unknown issuers.

Typically, community development financial institutions (CDFIs) issue bonds through a corporate committee on uniform securities identification procedures (CUSIP). However, by going through a municipal CUSIP, Century Housing was able to drive down the cost of capital by broadening the investor universe and providing California state tax-exemption.

Century's first municipal bond, which was issued through conduit municipal agency the California Municipal Finance Authority (CMFA), is also the first to be rated by two ratings agencies, S&P and Fitch.

The bond will be used to construct or preserve more than 2,000 affordable housing units which, as one Environmental Finance Bond Awards judge noted, has become increasingly relevant. "Affordable housing, particularly in California, has been become more important during the time of the global pandemic."

In addition, by attaining a second opinion by Sustainalytics, Century Housing's bond has shown its environmental as well as social credentials. These include green buildings, energy efficiency and transit-oriented development.

"Century is honoured by this recognition which highlights the significant environmental and social impacts created by the housing built and preserved through Century financing," said Alan Hoffman, senior vice president and chief financial officer at Century Housing. "100% of net proceeds are applied to the creation and preservation of sustainable affordable housing across California, the state with the highest concentrations of homeless individuals and families in the nation."

"We were honoured to serve as sole underwriter for Century Housing's first municipal bond offering," added Peter Cannava, managing director at Wells Fargo Securities. "There were a lot of 'firsts': the first municipal bond offering the issuer brought to market, the first with a second-party opinion and the first CDFI to access the capital markets after the onset of Covid-19."

"We worked closely with Century Housing on a Sustainable Bond framework and positioned them with an investor class that would best understand its mission-based lending, rating criteria and outstanding loan portfolio," he added.