LISC & Incapital Announce Impact Notes

11.16.2020 - Press Releases

LISC announces up to $150 million in ‘AA-’ Impact Notes to finance economic opportunity in underserved U.S. communities, fuel recovery from COVID-19

NEW YORK (November 16, 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 to help accelerate its efforts to build economic opportunity, bridge the racial wealth gap, and support strong, healthy communities.

The Notes, which align with Social Bond Principles and United Nations Sustainable Development Goals, 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. *Past performance is no guarantee of future results. LISC will use the proceeds to refinance existing debt as well as to expand investments in affordable housing, small businesses, health care, community safety, strong schools, and jobs. To date, LISC has invested more than $22 billion in thousands of urban and rural communities.

“Increasingly, impact investors are looking to support efforts that catalyze opportunity and revitalize local economies, especially in communities where a history of racial discrimination continues to affect the outlook for residents,” said Maurice A. Jones, LISC president and CEO. “COVID-19 brings this into even sharper relief, and investors are responding in ways that help bridge health and wealth gaps, so that all Americans, regardless of race, class or zip code, have the chance to thrive.” 

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 November 2020. The Notes will be offered at fixed interest rates with maturities that range from one to 10 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 October 20, 2020. The rating mirrors S&P’s issuer credit rating, assigned to LISC in October 2020, 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 wealth 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 $1.8 billion in 2019 to support strong and healthy communities. “CDFIs represent 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 full-service program offices in three dozen cities as well as a national rural development effort that touches more than 2,100 counties. Examples of previous LISC projects include:

• Housing: Two full-time workers making $15 per hour can only afford to live in 5 percent of Bay Area neighborhoods in California. Through the Bay’s Future Fund, LISC is partnering with the Chan Zuckerberg Initiative, the San Francisco Foundation and others to preserve, produce and protect affordable housing with new loans to mission-driven groups. The Fund’s first closed transaction, a $1 million construction loan to Bay Area Community Land Trust, will help the 101-year old McGee Avenue Baptist Church reopen its rental property to low-wage residents. 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 Maria 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.
• Covid-19 Relief: The Paycheck Protection Program (PPP) was designed to keep workers on payroll and businesses open through fully forgivable loans. LISC and its Small Business Administration-licensed lending-arm, immito, provided PPP loans to enterprises like Joyful Hearts Childcare Center in Pawtucket, R.I., which could not access capital through traditional banking relationships. Read more about the program here.

The Notes, offered solely by prospectus in states where authorized, are subject to risks, including the possible loss of principal. S&P and Vigeo Eiris ratings should not be the only factors investors rely on when assessing the risk of this investment. Investors should rely on the terms as presented in the prospectus. 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 November 2020. Incapital’s Legacy platform offers products that align financial goals with personal principles through values-based investing. *Past performance is no guarantee of future results.

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 $22 billion to build or rehab more than 419,000 affordable homes and apartments and develop 70.3 million square feet of retail, community and educational space.