BlueHub Loan Fund Secures $86.8M with Second Public Bond Issuance

Sustainability Bonds Rated 'A+' by S&P Global Ratings, Enable Growth for Loan Fund

BOSTON, Nov. 18, 2024 /PRNewswire/ -- BlueHub Capital today announces its affiliate, BlueHub Loan Fund, a leading national nonprofit community development financial institution (CDFI), successfully issued $86.8 million of Sustainability Bonds in its second public debt offering. The financing will support the growth of BlueHub Loan Fund and its portfolio of loans to community development projects.

BlueHub Loan Fund helps connect low-income communities with flexible financing to generate equitable and inclusive economic opportunity. It provides financing to affordable housing projects, community health centers, schools, grocery stores and other community assets across the United States.

The proceeds raised by the bonds provide critical scale capital that enables the Loan Fund to meet borrower credit demand and maximize impact across the communities it serves. The bonds were issued in two tranches, a $60.5 million Series A municipal taxable bond, and a $26.3 million Series B municipal tax-exempt bond?the first ever tax-exempt bond issued by a CDFI.

The Series A taxable bond proceeds will be used to continue the intentional, disciplined growth of BlueHub Loan Fund by providing mission-critical financing to community development projects that support low-income areas across the Loan Fund's 23-state geographic footprint. These bonds carry a bullet maturity in 2029.

The Series B tax-exempt bond proceeds will provide long-term financing to existing public charter school borrowers within BlueHub Loan Fund's portfolio. This innovative "forever financing" product will help these schools stabilize facility costs for up to 20 years through leveraging the Loan Fund's investment grade credit rating and strong balance sheet to deliver long term, cost-saving capital and to fill a gap in the marketplace. The Series B bonds mature in 2044. Importantly, the tax-exempt bond sale is not only impactful for the continued development of the CDFI sector in the capital markets but also for the further diversification of the lending products that CDFIs can offer to their borrowers.

"BlueHub continues to push the boundaries of community finance to find new ways to meet the needs of the neighborhoods we serve, and this second public bond offering is a great example of that commitment to innovation," said Elyse Cherry, CEO of BlueHub Capital. "Thanks to the BlueHub team and to Morgan Stanley and Momentus Securities for executing on the deal."

Both bonds were rated 'A+' with a stable outlook by S&P Global Ratings, which also reaffirmed the same rating for BlueHub Loan Fund's 2020 Sustainability Bond and the Loan Fund's long-term issuer credit rating. According to S&P Global Ratings, the reaffirmed rating reflects BlueHub Loan Fund's increased capital adequacy,?above-average profitability (compared to other rated CDFIs),?very strong asset quality, and?proactive loan portfolio management.

"We are seeing increasing demand for patient and flexible capital and this new source of funding from the Sustainability Bonds gives us the resources we need to continue building healthy communities where low-income people live and work," said Karen Kelleher, President of BlueHub Loan Fund.

S&P Global Ratings independently validated BlueHub Loan Fund's Sustainability Bond, concluding that BlueHub's loans contribute to or advance eight of the United Nation's Sustainable Development Goals and align with all components of the International Capital Markets Association's (ICMA) 2018 Sustainability Bond Guidelines and 2023 Social and Green Bond Principles. Furthermore, approximately $6 million of the bond proceeds will be used to finance solar power projects, resulting in the strongest "dark green" rating from S&P Global Ratings' Second Party Opinion.

Morgan Stanley served as BlueHub Loan Fund's sole underwriter. The Series 2024 bonds were oversubscribed and garnered interest from a wide range of institutional investors including impact investors. Moreover, BlueHub successfully expanded its investor base in the transaction.

"BlueHub Loan Fund Series 2024 Sustainability Bonds, as the first-ever tax exempt CDFI bond, marks a new milestone for the CDFI sector in the public capital markets," said Grace Chionuma, Managing Director and Head of the Community Development Group within Public Finance Banking at Morgan Stanley. "We are pleased to have had the opportunity to support BlueHub Loan Fund's impactful work through the successful underwriting of their inaugural debt IPO and the Series 2024 bonds."

Momentus Securities served as the structuring agent on the deal. According to Ryan Carter, a Director at Momentus Securities, "BlueHub's Series 2024A and Series 2024B Sustainability Bonds execution marks a step forward for CDFIs within the capital markets, tapping into the tax-exempt market for the first time. The transaction also furthers BlueHub's mission and also allows its community borrowers to benefit from increasingly diverse sources of capital.?As an investment bank focused on community impact, Momentus Securities is proud to have served BlueHub on this milestone transaction."

About BlueHub Capital
BlueHub Capital?is a mission-driven, nonprofit community development finance organization focused on building healthy communities where low-income people live and work. BlueHub uses innovative financial tools to support projects that make communities more vibrant places to live through four distinct programs:?BlueHub Loan Fund?(community development financing),?BlueHub SUN?(foreclosure relief),?BlueHub Energy?(clean energy access) and?One Percent for America?(citizenship financing).

Contact: Anna?Loshak, anna.loshak@berlinrosen.com

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SOURCE BlueHub Capital