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Aggregator raises £30m for housing association at less than 3%
A bond aggregator has raised £30m for a housing association at a rate of less than 3% in its first ever “reverse enquiry” for funding.
Blend, a new vehicle launched by long-standing aggregator The Housing Finance Corporation (THFC), raised the 15-year finance for Hightown Housing Association at a rate of 2.984%, which is 1.5% more expensive than equivalent government debt (gilts).
This rate compares favourably to 10-year finance raised recently by Notting Hill Genesis, which priced 1.73% more expensive than gilts, and is close to Clarion’s 10-year funding deal, which cost 1.48% above gilts.
Aggregator MORhomes recently raised £250m of 19-year finance for nine housing associations at a rate of 1.9% more expensive than gilts.
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A reverse enquiry occurs when an investor approaches the firm seeking an opportunity to invest.
“A number of prominent investors still have significant funds to invest,” said Piers Williamson, chief executive of THFC.
“Where we can identify this interest and match it with a borrower, we believe we can bring a new form of competitive tension to bear, compressing credit spreads. But to do this, we need a strongly rated vehicle (Blend) to underpin investor confidence in this market.”
Blend carries an A2 stable Moody’s rating.
David Bogle, chief executive of Hightown, said: “We are pleased to have secured 15-year funding at below 3%. We will use the money to build 1,000 affordable homes over the next two years to help reduce homelessness and house families who cannot afford to buy or rent at market rates.”
“It has been good to work with THFC once again using the new Blend borrowing option. The whole process, including the rating work, has been smooth, straightforward and expeditious.”
This is Blend’s second deal, following a £250m debut issue in September.
