Clarion raises £300m through sustainable bond issue
Clarion Housing Group has raised £300m through a sustainable bond issue, taking the total value of its environmental, social and governance (ESG) linked finance deals since last year to more than £1bn.
The UK’s largest housing association, which manages around 125,000 homes, priced the 30-year bond at a coupon of 1.875%.
With a spread of 93 basis points over gilts – the government cost of borrowing – the landlord’s all-in cost was 1.982%.
It said the issue was significantly oversubscribed with more than £1bn in orders, demonstrating “the demand to support an organisation delivering strong financial results and which is building a record number of new homes”.
Gary Leadbeater, director of treasury and corporate finance at Clarion, said: “This is a very successful bond issue with our order book demonstrating that our social purpose and delivery of our corporate strategy is appealing to investors looking for strong performance, a commitment to ESG principles and an ambitious plan for the future.”
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Clarion has now raised nearly £1bn in sustainable bonds – that is, a transaction where the borrower promises to spend the money on green or social projects and report back to investors.
In January 2020, it issued £350m – the first of its kind by a housing association – followed by a further £300m that November.
It also secured a £100m ESG-linked loan from NatWest in April this year.
Sustainability-linked finance has become increasingly popular in the social housing sector over the past year as landlords seek ways to fund decarbonising their homes and investors look to boost their ESG credentials.
Clarion’s results for 2020/21 showed a 28% drop in its surplus amid the coronavirus pandemic.
It has a long-term target to build at least 4,000 homes a year, securing a total of £489.7m in grant through the Affordable Homes Programme in allocations announced this week by Homes England and the Greater London Authority.
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