New bond raises £40 million
Places for People has raised £40 million from investors after officially launching a new retail bond.
The bond, the second issued by the 62,000-home landlord in seven months, was announced earlier this month but has been launched on the London Stock Exchange this week.
Retail bonds differ from the wholesale bonds normally issued by housing associations as they tend to be bought by smaller investors, rather than institutions such as pension funds.
The retail price index linked will pay a semi-annual coupon of 1 per cent over its 10-year lifespan.
Places for People raised £140 million from its first retail bond in May 2011. It has raised more than £1 billion in private finance in UK and overseas, compared to £340 million it has received in government funding.
Chris Jones, head of tax and treasury at Places for People, said: ‘We’re delighted with the support retail investors have shown in this issue. Over the last 9 months we have raised £180m from the retail bond markets, demonstrating strong demand for investment in the housing sector, which has good credit credentials, stable cash flows, and strong financial viability.
‘The retail bond market represents a new stream of finance for the housing sector, and is part of our longer-term funding strategy to diversify our investor base through the debt capital markets and to increase flexibility and responsiveness to access the financial markets by unsecured fund raising across a range of maturities.’
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Readers' comments (4)
Concerned Landlord | 28/01/2012 3:28 pm
The article does not say that the housing association will be doing with this financing?. Build new houses? or buy existing ones up?
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Rick Campbell | 30/01/2012 7:41 am
Chris Jones, Group Head of Tax and Treasury at Places for People:
"The proceeds raised by the RPI linked bond will be used to finance Places for People's future operations, capital expenditure and to refinance existing secured bank debt."
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Mr Reasonable | 30/01/2012 1:37 pm
What a miraculous word 're-financing' is. In this instance swapping a secured debt for an unsecured debt, yet still having a debt, which is probably bigger than the last one.
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Neil Robinson | 30/01/2012 7:23 pm
But if it refinances one of RPI + 2%, then providing the costs of issuance are less than the difference, it makes financial sense doesn't it? 1% pa over 10 years of £40m is £4m - that builds a lot of properties
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