Circle Anglia breaks bond record with £275m deal
Circle Anglia has raised £275 million with the biggest ever own-name bond issue by a housing association.
The deal broke a record set just two months ago when Affinity Sutton raised £250 million with the first bond issue by a single association in five years.
But Circle Anglia’s Aa3-rated 30 year fixed rate bonds carry a coupon of 7.25 per cent – compared with a coupon of 5.98 per cent on the Aa2 rated Affinity Sutton bonds - so Circle Anglia will pay more for the cash.
Phil Jenkins, a director at RBC Capital Markets, which arranged both issues, said the main reasons for the price difference were the shocks sustained by the financial system since the Affinity deal.
‘Because there have been ongoing problems in the market, bond spreads have widened – the whole market has moved out since that time,’ he said.
Calum Mercer, group finance director for Circle Anglia, said: ‘It is a very uncertain environment and we wanted to make sure we could deliver all the things we wanted to do on the stock transfers we have brought in, and on our development programme.’
The group now had total committed facilities of £1.8 billion, he added, enough to fund its business plan for the next 30 years.
Mr Jenkins said it was ‘very difficult’ to criticise any borrower taking Circle Anglia’s approach in the current market: ‘Given that there are a lot of borrowers – not just [housing associations] but corporate borrowers – who are struggling for liquidity and refinancing at the moment, taking a cautious view to liquidity rather than a wait-and-see view is a very prudent thing to do.’
The Circle Anglia bond issue is part of a £1.5 billion note programme rated Aa3 by Moody’s Investor Service.
A spokesperson for Traderisks, which advised Circle Anglia on the deal, said: ‘With the financial markets in their current state, securing a fully-funded business plan is a great achievement.’