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Aggregator issues £16m bond amid Brexit volatility
Housing association aggregator The Housing Finance Corporation (THFC) has issued £16m-worth of bonds for Adactus Housing Association.
Adactus, part of the 34,000-home Jigsaw Homes Group, has borrowed the money at an all-in cost of 3.48%, which is 1.65% more expensive than the cost of equivalent government borrowing.
This is only a very slightly more expensive spread than THFC achieved in its summer deals, when it issued £10m for Welsh housing association Rhondda and £250m for three associations through its new subsidiary, Blend.
These deals were priced at 1.52% and 1.58% more expensive than the cost of government borrowing, respectively.
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Piers Williamson, chief executive of THFC, said: “The gilt market has become very volatile from day to day recently, reflecting both Brexit uncertainty, but also concerns from the US that their economy may be weakening.
“Our approach to retained bonds, coupled with our track record, puts us in pole position to take advantage of narrow windows of opportunity and deliver cost-effective funding to our borrowers – even in these market conditions.”
Rival aggregator MORhomes cited volatility in the market as the reason for delays before its first issue, as Inside Housing reported last week that it was asking shareholders for more money.
After this, THFC has now issued £1bn-worth of bonds from its ‘Funding No.3’ programme.
Paul Chisnell, executive director of finance at Adactus, said: “Really pleased with the 3.48% all-in rate locked in for 25 years, a great result with the market as volatile as it is.
“This rate reduces Jigsaw Homes’ average cost of borrowing and the finance underpins our development plans of delivering circa 600 new homes per annum over the next four years.”
Update: at 8.46 on 11.12.18 This article was updated to correct the spread over gilts.
Update: at 15.10 on 11.12.18 This article was updated to correct the number of homes managed by Jigsaw Group.
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