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Funding aggregator raises £40m for Wandle

Funding agency MORhomes has raised £40m for its member Wandle Housing Association to build homes and improve services.

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Picture: Getty
Picture: Getty
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Funding aggregator raises £40m for Wandle #ukhousing

The money was raised under MORhomes’ sterling social bond programme as a ‘tap’ – which raises more money on the same terms and conditions as a previously issued bond, but the price may alter.

This exercise, managed by NatWest Markets, raised £38.6m, which has been topped up to £40m for Wandle by borrowing from other lenders.

The money was issued at a rate of 3.4% until 2038 and is priced at 108.724 to give a yield on the bonds of 2.788%. This is 0.69% inside the rate on its inaugural issue in February.

The notes carry a 3.4% coupon paid semi-annually and will mature on 19 February 2038 and were issued at a spread to gilts of 1.75%.


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MORhomes is owned by some 60 housing associations, and is rated A- with a positive outlook by rating agency Standard & Poor’s.

In its recent rating analysis, S&P highlighted MORhomes’ strong financial profile and structure, which mitigates credit risk, and said the rating could be upgraded within two years if its business plan is met.

Patrick Symington, chief executive of MORhomes, said: “Documenting and agreeing this transaction has taken less than four weeks from start to finish, demonstrating that MORhomes is a fast and highly efficient way for housing associations to access the capital markets.”

Sue Bate, executive director of finance at Wandle, said the money would be used to “enable us to build more homes and improve the services we can provide to our residents”.

MORhomes was established in response to the concerns about the capacity of the sterling bond market to fund the needs of housing associations and allows members regular access to the capital markets.

There were nine borrowers when the bond was originally offered last February.

Jargon buster: bonds and tap issues

Jargon buster: bonds and tap issues

Bond: Bonds are essentially tradable IOUs issued by companies, governments, housing associations, or others, in order to borrow money on the capital markets.

The ‘coupon’ on a bond is the interest rate that the issuer pays annually on the face value of the bond.

Gilt: The price the government pays for its borrowing.

The spread over gilts is the cost the borrower pays over and above what the government is currently paying.

The cost of government borrowing is used as a baseline because it is considered low risk by investors. The spread is often therefore seen as a measure of an organisation's creditworthiness.

All-in: The total cost of the debt to the bond issuer, ie, the interest rate paid.

Tap issues: Used to raise more money on the same terms and conditions as a previously issued bond- but the price may alter.

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