$100 Million in Sustainable Bonds for Social Impact: Announcing LIIF’s First Bond Issuance
The Low Income Investment Fund (LIIF) is excited to announce its first public debt offering with a $100 million Sustainability Bond issuance. The offering, which received over $1 billion of interest, signals confidence in the financial strength and high impact of LIIF, one of the nation’s leading nonprofit community development financial institutions (CDFIs).
The offering included $25 million of 7-year and $75 million of 10-year bonds, which will be used to finance vital community development projects across the country. LIIF’s successful issuance points to the organization’s strong track record and high-quality team. It also builds on the achievement of previous CDFI issuances and demonstrates increased market confidence in the sector.
“We’ve invested more than $2.5 billion and leveraged over $12 billion of private capital to serve more than 2 million people in 31 states,” said LIIF CEO Daniel A. Nissenbaum. “This issuance represents a significant milestone for LIIF in accessing the capital markets and represents a powerful signal that the market understands the social and financial returns that LIIF, and other CDFIs, provide to our investors and the communities we serve.”
“For 35 years, LIIF’s investments have been creating better places for families to live, work and thrive,” said Carol Naughton, LIIF’s Board President and President of Purpose Built Communities. “This remarkable achievement will enable LIIF to expand its impact, addressing the fundamental social determinants of health that further our vision for healthy communities with equal access to opportunity.”
LIIF’s issuance, which received an A- rating with a Positive Outlook from S&P, was led by Morgan Stanley as senior manager with JP Morgan Chase as co-manager. It attracted significant interest from global investors including PIMCO, Neuberger Berman and Nuveen.
“As a leader in responsible investing, we are committed to seeking out opportunities that affect social change and amplify impact,” said Stephen M. Liberatore, CFA, managing director at Nuveen overseeing $10 billion in responsible investing fixed income strategies, including the TIAA-CREF Social Choice Bond Fund. “The Low Income Investment Fund bonds offer the opportunity to invest in a diverse portfolio that in turn helps us achieve both competitive returns and a direct and measurable impact, such as access to affordable housing, educational opportunities, health clinics and healthy food for struggling communities, on behalf of our clients.”
This issuance with Morgan Stanley and JP Morgan Chase is a continuation of LIIF’s relationship with both organizations, which have been long-time supporters of LIIF’s mission.
“Morgan Stanley is honored to have led LIIF’s inaugural $100 million public debt issuance, a transaction with over $1 billion in investor orders, including more than $345 million from sustainability-focused funds. This signals a new phase of public capital market acceptance and demand for CDFI bonds,” said Audrey Choi, CEO of the Morgan Stanley Institute for Sustainable Investing. “It marks the continuation of our long-standing partnership with the Low Income Investment Fund, and our firm-wide dedication to the CDFI sector at large.”
LIIF’s issuance is the first CDFI bond to receive a second party opinion from Sustainalytics to further validate LIIF’s Sustainability Bond Framework. This is also the first public offering to align directly with the United Nations’ Sustainable Development Goals. The Sustainability Bond Framework that LIIF developed to issue its bond supports investments in projects that link environmental sustainability and social impact.
“ESG considerations are increasingly top of mind for investors today and sustainability bonds can be beneficial instruments for issuers interested in simultaneously raising capital and positively contributing to important environmental and social causes,” said Heather Lang, Executive Director of Sustainalytics’ Sustainable Finance Solutions team. “Sustainalytics believes that the Low Income Investment Fund’s Sustainability Bond is credible and impactful and aligned with its mission as a community development financial institution. LIIF is uniquely positioned to allocate capital to low income communities, and has also notably opted to incorporate environmental factors into its framework.”
LIIF’s capital is critical to its borrowers, who are mission-driven developers and nonprofits. The bond issuance enables LIIF to provide these organizations with more stable, lower cost and longer term capital, which supports their long-term sustainability and enables them to provide much needed services in their communities.
“LIIF is a premier CDFI partner because of their creativity, leadership, and financial execution. Our organization works across 30 metro areas and 14 states on transformative development ventures. LIIF’s financial expertise and innovative, flexible capital is critical to supporting The Community Builders’ mission of building and sustaining communities where all families can thrive,” said Bart Mitchell, CEO of The Community Builders Inc., a LIIF borrower and one of the country’s largest housing & community development nonprofits.
With this bond offering, LIIF will be able to support more projects that expand opportunity for low income communities such as:
- Several projects in Washington, D.C. that create and preserve affordable housing for low income District residents in neighborhoods at risk of rapid gentrification
- Affordable housing, early childhood education and nonprofit arts space in San Francisco’s Mission District, which is at the forefront of the city’s displacement crisis.
- A Federally Qualified Health Center in New Orleans that will bring needed health services and community programing to the city.
- A mixed-use development that provides residents of the South Bronx with much-needed access to a full-service grocery store, health center, and retail in a neighborhood that had lacked accessible shopping and health care.
In addition to its S&P rating, LIIF consistently receives the highest possible rating for impact and financial strength from AerisTM, a third-party rating organization for CDFIs. For three years in a row, LIIF has been selected for the ImpactAssets 50, a list of 50 top-tier impact funds.