New Hampshire's National Finance Authority doesn't seek the spotlight. But it issued $4 billion of bonds last year.
That means it's
The NFA has largely flown under the radar, avoiding the negative attention that comes with bond defaults and troubled credits that have plagued other national municipal bond conduits.
Why did New Hampshire create an issuer for out-of-state bonds?
"To promote itself as an effective location for private enterprise," according to the statute that created the NFA. It's therefore in the state's interest "to provide for the establishment, support, preservation, and redevelopment of business and industry, whether or not operated for profit, located outside the state of New Hampshire."
The authority was created in 2018 as an arm of New Hampshire's Business Finance Authority. The Business Finance Authority programs include issuing
The market responded quickly.
The NFA priced its first deal just three months after that statute was signed into law:
In the years since, the authority has issued $9.67 billion of bonds, according to data from LSEG, MuniOS and EMMA. In many years, that volume came from a few large transactions.
The NFA has a lot of repeat customers. Covanta returned to
The NFA was enmeshed in the national market from its creation. It's administrated by Granite Municipal Advisors, a five-member firm.
"The combined NFA team has a proven track record of facilitating over $20 billion of public benefit projects,"
The NFA had some big years — in 2020, its second full year of existence, LSEG credits it with $1.15 billion of transactions. But its volume in 2024 was higher than the prior four years combined.
The authority's growth was propelled, in part, by a wave of demand from Texas borrowers financing infrastructure for municipal utility and improvement districts.
The first of these deals priced in July, four months after the Texas Attorney General's office published an
Since July, the NFA has priced 12 such Texas development deals for $901.8 million, according
These districts authorize developers to build public infrastructure projects, and eventually reimburse them with bonds. In the meantime, the developers finance construction through private loans, or bonds.
The letter provided "guidance as to the safeguards needed" to ensure the loans and reimbursements are "in accordance with Texas law."
Swings in demand have influenced the NFA's output before. In 2020 and 2021, more than half of its volume was from federal lease revenue bonds. In 2022, it priced one $27 million federal lease revenue-backed transaction, before borrowers' appetites for those bonds dried up.
But some of the NFA's growth comes from an increase of long-standing practices. In 2020, the NFA began working with Citi to price bulk affordable housing deals. Each series of
To date, the authority has issued $2.82 billion of these certificates. It priced five deals of this nature last year, totaling $1.4 billion.
The NFA's 2024 volume came from just 30 deals, according to LSEG. The Wisconsin-based Public Finance Authority, was the next biggest national conduit, credited with $3.04 billion from 72 deals.
These aren't the only factors setting the NFA apart from other national conduit issuers.
Borrowers using established national conduits like the
None of the NFA's bonds have defaulted. Only one of the authority's issuances has experienced a credit event;
When evaluating deals, the NFA considers the public benefit, the benefit to New Hampshire, and risk management, according to John Stoecker, a program administrator at the authority.
The authority has never issued bonds on behalf of
"I've witnessed them screen out folks that might not fit their standards," said Sam Hartman, senior vice president of public finance banking at D.A. Davidson, which managed many of the NFA's Texas deals. "It's not just words, they really do focus on quality."
The NFA's screening process is motivated by its mission, Stoecker said; having a solid track record helps promote New Hampshire as an effective state for business. The NFA has rejected certain types of risky transactions enough times that people have stopped pitching those deals to the authority.
The lack of troubled credits is probably appealing to borrowers, said Matt Fabian, partner at Municipal Market Analytics.
"The name Wisconsin equates with credit risk in the municipal sector because of the PFA," Fabian said. "Now, when you hear Wisconsin, you think credit risk."
If the NFA continues to avoid credit problems, "they could remain invisible to a large part of the muni market," Fabian said, "which is probably a good thing for their borrowers."
If an investor is familiar with the NFA's reputation, Hartman said, the fact that the NFA signed onto a deal gives them confidence and "allows them to focus on the specifics of the credit."
"I don't think that it's the primary driving factor that leads an investor to invest in a bond or not," Hartman said, but "I think they like to see that the bond is being issued by, in this case, the NFA, who has a really great track record."
The authority's reputation may grow now that its volume has hit new heights. So far, the demand from borrowers seems to be holding strong.
Last month, the NFA priced another $45 million of
Hartman doubts the NFA's standards will impede its growth, or vice versa.
"I think they have a really fundamental and sound process. And I think their process is scalable," Hartman said. "They've got the right pieces in place and fundamentals in place … to maintain high standards."
"If NFA's brand is going to be more conservative, but still national underwriting, they should make that known," Fabian said.
