Date: 2/13/2020
Source: Incapital
Author: Incapital

LISC Announces S&P ‘AA-’ Rated $150 Million Impact Note Program to Finance Economic Opportunity in Underserved U.S. Communities

 

NEW YORK (___, 2020) — The Local Initiatives Support Corporation (LISC) is issuing up to $150 million of Standard & Poor’s (S&P) ‘AA-’ rated fixed income LISC Impact Notes that align with Social Bond Principles and United Nations Sustainable Development Goals to refinance existing indebtedness and to help accelerate its work around economic opportunity and drive investment capital into distressed urban and rural communities across the country.

 

The Notes offer retail and institutional investors the chance to generate both financial and social returns, drawing on LISC’s 40-year track record of community investment. Proceeds will support a range of high-impact efforts such as affordable housing, small business development, health care, community safety, strong schools, and jobs. To date, LISC has invested more than $20 billion in thousands of urban and rural communities.

 

“Impact investors are looking to put their capital to work in ways that catalyze opportunity for people all across the country,” said Maurice A. Jones, LISC president and CEO. “By financing a strong social and economic infrastructure, they can support broadly shared growth and prosperity in rural and urban America.”

 

The Notes will be offered on a continuous basis through Incapital LLC, a leading underwriter and distributor of securities, and are expected to be available beginning on or about February 2020. The Notes will be offered at fixed interest rates with maturities that range from one to ten years in denominations as low as $1,000. The current prospectus is available online at www.lisc.org/invest.

S&P assigned a ‘AA-’ rating to the Notes on December 23, 2019. The rating mirrors S&P’s issuer credit rating, assigned to LISC in November 2019, which highlights the organization’s diverse and growing asset base, minimal loss exposure, and strong history of loan performance. LISC is a certified Community Development Financial Institution (CDFI)—a Treasury Department designation for specialized lenders focused on the needs of low-income people and places—and an ImpactAssets 50 Fund Manager.

 

This is just the second time that a CDFI has offered Notes that are S&P-rated, DTC-settled and available on a continuous basis through brokerage accounts in most U.S. states. LISC’s issuance is the first CDFI Notes program to receive a second-party opinion from Vigeo Eiris, a global rating and research agency focused on evaluating organizations’ social, environmental and governance factors, to validate its alignment with the International Capital Market Association’s Social Bond Principles and the United Nations Sustainable Development Goals.

 

“The field of community development might be relatively new to the capital markets, but it is not new to meeting investor expectations for performance,” said Jones, noting that LISC raised and invested more than $1.5 billion in 2018 to support strong and healthy communities. “This is a proven investment sector that continues to deliver for families, communities, and investors looking to finance lasting economic progress.”

 

LISC is headquartered in New York but is locally focused, with operating locations in 35 cities and a rural development effort that touches more than 2,100 counties. Examples of previous LISC projects include:

 

  • Housing: HUD estimates that repairs for the country’s badly deteriorating public housing total $26 billion. Through the HUD Rental Assistance Demonstration project, the city of San Francisco developed a plan to revitalize more than 4,500 units of its deteriorating public housing stock, investing $15 million in predevelopment funds. When a funding gap threatened progress, LISC partnered with Dignity Health to each put up $5 million to close the gap and support critical predevelopment work. Read more about the project here.

  • Education: LISC Charter School Financing (CSF) works to ensure that children have access to a successful public school in their community. For example, in 2015, CSF provided KIPP New Jersey a $6 million permanent loan to finance a new campus for up to 1,000 high school students on the site of an abandoned Boys & Girls Club in Newark. Read more about the project here.

  • Health and Food Access: Since 2012, LISC has leveraged $16.5 million in credit enhancement awards from the CDFI Fund’s Healthy Food Financing Initiative (HFFI) to invest in projects that improve access to healthy foods in food deserts. Leveraging HFFI dollars, LISC provided $3.6 million to Vicente’s Tropical Supermarket to rehab an abandoned structure for a new supermarket. Co-located on the site, LISC provided $8 million for Brockton Neighborhood Health Center (BNHC), a neighborhood health clinic that serves low-income residents. Vincente’s and BNHC work together on nutrition programming to boost the health of their patients and customers. Read more about the project here.

  • Economic Development: Hurricane Marie inflicted an estimated $94 billion in damage in Puerto Rico, with many rural residents only seeing power restored more than a year after the hurricane hit. Rural LISC invested $250,000 in inverSOL, a Puerto Rican-based solar-power manufacturer, to combat power loss following future natural disasters. Read more about the project here.

 

The Notes, offered solely by prospectus in states where authorized, are subject to risks, including the possible loss of principal. The prospectus, pricing supplements, and information about risks and how to invest in the new LISC Impact Notes will be available to the public online at www.lisc.org/invest and to financial professionals through Incapital’s Legacy™ platform, beginning or about February 2020. Incapital’s Legacy platform offers products that align financial goals with personal principles through values-based investing.

 

About LISC

With residents and partners, LISC forges resilient and inclusive communities of opportunity across America – great places to live, work, visit, do business and raise families. Since 1979, LISC has invested $20 billion to build or rehab 400,500 affordable homes and apartments and develop 66.8 million square feet of retail, community and educational space. For more, visit www.lisc.org.