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CalHFA says hedging program and recent bond sales produced multimillion gains and a new single‑family financing route
Summary
CalHFA reported $24 million in revenue from earlier interest‑rate hedges, closed multiple bond series (including a $157M tax‑exempt multifamily sale and an $80M taxable single‑family sale) and launched a new MyAccess bond financing option that staff say can lower borrower costs.
CalHFA’s finance team told the board on June 23 that interest‑rate hedges entered in 2021–22 and executed portfolio actions produced roughly $24 million in one‑time revenue and helped the agency return to the capital markets with multiple recent bond sales.
“Because we acted in 2021 and 2022 to hedge the agency’s risks, this agency received $24,000,000 in revenue from our termination of of hedges,” Director of Financing Erwin Tam said, describing proceeds staff will apply to bond transactions and to strengthen the agency’s financing platform. Tam said hedging and other financing reforms allowed the agency to execute a $157,000,000 tax‑exempt multifamily bond transaction and an $80,000,000 taxable single‑family bond issuance in recent weeks.
Tam characterized the work of the last several years as a turning point: “This is a once in a lifetime opportunity for CalHFA,” he said, describing the adoption of new debt and investment policies, consolidation into two modern indentures, and a new sustainable‑bond framework backed by a second‑party opinion from S&P.
CalHFA staff told the board the combined effect of updated indentures, hedging and recent sales will: - Provide an additional annuity‑style interest income stream to the agency, helping financial sustainability; - Create a second route to finance single‑family loans through the MyAccess bond program (in addition to CalHFA’s TBA market executions); and - Lower effective borrower costs on some MyAccess loans, staff said, estimating roughly $15,000 in life‑of‑loan savings per loan in the current structure compared with prior executions (staff framed this as an illustrative estimate tied to assumptions about rates and outstanding terms).
Tam also said the agency’s hedging activity meant CalHFA could issue bonds in the current cycle without previously used short‑term put structures, which staff said reduces short‑term liquidity risk.
Board members asked whether the large one‑time hedge revenue was likely to recur; staff said the $24 million represented proceeds tied to prior hedges entered when interest rates were much lower, and that similar windfalls should not be expected. Staff emphasized the underlying objective was risk mitigation and more stable access to capital rather than recurring windfalls.
Ending: CalHFA staff said they will continue to use debt management tools and investor outreach to expand financing options and pursue the agency’s multifamily and single‑family lending goals.
