You are viewing 1 of your 1 free articles
New aggregator backs away from ‘£1bn in a year’ pledge
A new social housing bond aggregator has backed away from a pledge to issue £1bn of bonds for housing associations this year.
In an interview with Inside Housing, MORhomes’ chief executive, Patrick Symington, said the vehicle would “not necessarily” reach a total of £1bn of bond issues over the next 12 months, as it had originally planned.
The aggregator priced its long-awaited debut £250m bond last week, with the money split between nine of its 63 housing association shareholders.
This was a significantly smaller issue than the £1bn worth of bonds it originally intended to issue as a debut. When it dropped this target to £250m, its chair, Neil Hadden, told Inside Housing that the plan was to issue “£1bn a year” and that this did not have to be in a single issue.
READ MORE
Mr Symington, however, said that it would “not necessarily” do that this year but that the £1bn a year figure was an “aspiration”.
He told Inside Housing: “Our aspiration is to issue £1bn a year in due course. We are planning to issue again in due course.
“[We will] not necessarily [issue £1bn this year]. We also want to issue in a responsible way for our investors… That’s our target, to get to that at some point. We’ll build to that.”
The interest rate on the bond was 1.9% higher than the cost of equivalent government borrowing, meaning MORhomes also missed its target of issuing at only 1% above government rates.
Asked about this, Mr Symington said: “We think that is a result entirely of us being a start-up and that’s a premium we’ve had to pay. To some extent, we’ve been penalised for being an innovation.”
He added: “Looking on the bright side, we are now up and running. Our job will be to sway the investors, bring that spread in and improve it as we further establish ourselves in the market.”
Mr Symington told Inside Housing he “definitely” expected the ‘spread’ – the difference between the interest rate and the cost of equivalent government borrowing – to be narrower on the next issue.
He added that MORhomes struggled because as well as being a start-up, there was “the political uncertainty around Brexit and also other wider, global issues, such as the USA-China trade war”.
