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The Community Preservation Corporation (NY)



Taxable Bonds, Series 2020 (Sustainability Bonds)

January 29, 2020


Image by Sam Mgrdichian

The largest bond sale by any Community Development Financial Institution to date

CPC is a 501(c)(3) and a federally-certified CDFI, dedicated to providing responsible financial products and services that foster economic growth to underserved communities. To that end, CPC provides construction lending, permanent lending, and equity investing products throughout NYS and the region. CPC is fully self-supporting, requiring no philanthropy or grants. As of June 30, 2019, CPC had $242.6 million in Net Assets, $52.1 million in Revenues, and a $4.3 billion portfolio of construction and permanent loans. Formed in 1974, it is one of the oldest CDFIs in the Nation and is one of the largest CDFIs solely dedicated to investing in multifamily housing.

The Bonds were used to refinance an existing $500 million syndicated, floating-rate line of credit, which is primarily used to fund CPC’s construction loans and, as of December 31, 2019, had a balance of approximately $323 million. CPC intends to fully allocate the Bonds’ proceeds to refinance the debt associated with sustainable projects, i.e. projects for those under 80% AMI or “energy efficient” projects where CPC provided financing for energy retrofitting.

Due to the Bonds intended use of proceeds and CPC’s organizational mission, the Bonds are designated as “Sustainability Bonds.” Sustainalytics US, Inc. provided a second-party opinion that CPC’s Sustainability Bond Framework comports with recognized standards and entitles the Bonds to be labeled as Sustainability Bonds.

The transaction was structured as a single 10-year bullet maturity with a Make-Whole Call at UST + 20 bps. There were no mandatory sinking fund redemptions.

Marketing for this transaction included an investor presentation posted two weeks prior to pricing. It was viewed by 43 individual investors. Additionally, an investor meeting was held in Boston the week prior to pricing, and was attended by some of the largest and most active investors, including Wellington, Fidelity, Eaton Vance, and Income Research and Management. The CPC staff and the Senior Managers also made themselves available for one-on one calls with a number of additional investors.

In the weeks leading up to the pricing, Treasuries were performing well, with the 10-year at 1.60% as of Wednesday, January 29th, dropping by 8 bp since COB on Friday the week prior. Despite the recent outbreak of the Coronavirus looming throughout China and the world at large, spreads tightened as and yields declined about 5 bps out long from Monday to Friday of the week of pricing.

CPC received $296.7 million in orders from 12 different investors. The 10-year bullet maturity ultimately priced at +125 bps off the US Treasury, or 2.867%. This represents the lowest absolute yield ever achieved by a CDFI in a public bond offering. The Bonds, which were sold with a corporate CUSIP, represent the largest bond sale by any Community Development Financial Institution to date.

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