Tuesday, 17 January 2017

AHF issues £194m guaranteed bond

A government-guaranteed bond has raised £194m for seven housing associations at one of the lowest interest rates ever seen in the sector.

Affordable Housing Finance (AHF) announced a tap of its second bond this afternoon, which priced at 0.43% above the cost of government borrowing.

Inside Housing revealed last week that AHF was preparing the transaction.

That means the all-in cost of the finance is 2.71% – the lowest price for a large issue under the programme to date.

The price represents a substantial fall on the 3.76% for AHF’s first bond issuance in May 2014. It is the fifth-largest bond issued under the programme.

Demand for the transaction was said to be very good, with orders from at least one overseas central bank.

It means AHF has raised more than £1bn in bonds under the Affordable Homes Guarantees Programme (AHGP), which sees the government guarantee debt to reduce the cost.

Last year, the government decided not to renew the programme when it expires in March, but in practice it will not exhaust the current programme for several months.

It has also secured £1.5bn of potential investment from the European Investment Bank under the scheme, which is likely to fund 29,000 affordable homes by the time it closes.

Piers Williamson, chief executive of AHF, said: “Passing the £1bn bond barrier is a real statement of the success of the AHGP.

“The very low cost of funding has helped deliver a very significant number of badly needed affordable homes.”

Bromford, Gateway, Merlin, Oxford Citizens, BPHA, Viridian and Wales and West all took money under the scheme, which must be used to fund new affordable housing.

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