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Aggregator prices £25m bond for housing association at cheapest rate yet
Blend, the newly-established housing association bond aggregator, has priced a £25m bond for a new borrower at its cheapest rate so far.
Regenda Homes, the fifth housing association to join the aggregator, will receive the money on a 15-year basis at an overall interest rate of 2.83%.
The 11,000-home landlord, which operates in 30 local authority areas across the North West of England, will use the money to build around 1,300 properties over the next five years.
Regenda has borrowed the money at just 1.58 percentage points more than the cost of equivalent government borrowing.
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Tony Russell, executive director of resources at Regenda, said: “We have worked with our board and our treasury advisers, DTP, to explore our long-term financing options and are delighted with the outcome.
Piers Williamson, chief executive of Blend, which is a subsidiary of The Housing Finance Corporation, said: “This is the third deal in a row we have brought at under 3%. Housing associations are learning how to issue different maturities opportunistically.
“With the restoration of the rent settlement next year at CPI+1%, locking in a fixed rate cost lower than the settlement for 15 years looks a pretty sensible way of funding affordable housing.”
Government borrowing remains relatively cheap at a time when the global bond market has been hit by the USA’s trade war with China, Blend said.
Mr Williamson added: “In this environment, housing associations are viewed as a defensive investment.
“The emerging theme, where associations flex development schemes, often working with Homes England or the GLA, to switch tenures, particularly in the South East, is seen as a positive by investors.”
