Hyde sets its sights on £200m bond deal

Hyde Group plans to enter the bond market after Moody’s Investors Service assigned the housing association an Aa2 credit rating last week. The rating signals to potential investors that the association is a safe investment with low risk of failure.

If it raises the £200 million anticipated it would push the amount raised through capital markets since July 2009 to £1.1 billion. The firm’s statement of intent follows January’s news that London & Quadrant had raised £300 million with the sector’s largest ever bond deal.

Ray Christopher, director of tax and treasury at Hyde, said any bond would have to be in the £200 million bracket in order to attract sufficient appetite from investors.

‘We applied for a credit rating last year with a view to tapping the bond markets so phase one of our plan is complete,’ he added. ‘We are well capitalised so can dip into the market when the conditions suit us and will use the cash for refinancing and for our development programme.’

The increasing number of high profile bond deals confirms a shift in approach to finance from housing associations. In a report commissioned last year by Inside Housing publisher Ocean Media Group, public sector advisory firm Tribal predicted traditional bank lending maturities will shorten in the sector, with housing associations turning to the bond market for long-term finance.

Speaking at the British Property Federation annual housing conference last week, Mike Jones, a consultant at Tribal, said: ‘Shorter bank maturities mean that associations which do not access the bond market will be taking a refinancing risk as most social landlords run 30-year business plans.’

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