Apex downgraded by credit agency

Standard and Poor’s (S&P) released a judgement on Apex Housing’s creditworthiness today, citing Brexit and increased debt as the major causes of the downgrade.

It was given a negative outlook, indicating the possibility of further downgrades in the future.

In June, the 4,500-home Derry-based association took a loan of £130m from the European Investment Bank to scale up its development ambition.

The S&P judgement said: “The negative outlook reflects our view that Apex’s rating could come under further pressure, given that its debt is increasing slightly faster than its operating revenues.

“We also take into account the uncertain operating environment in the UK following the vote to leave the EU.”

Apex’s rating was not initially affected when the UK credit rating was downgraded following the EU referendum in the summer, despite most other associations receiving a downgrade.

This was due to S&P’s internal mechanisms for rating Northern Ireland and Northern Irish bodies.

The A rating remains investment grade, but is only one notch above the lowest investment grade rating of BBB.

It indicates that S&P believes the organisation is able to meet its financial commitments but is “somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions”.

Apex joins English association Home Group as the lowest rated among the portfolio of associations with a grading from S&P.

A spokesperson for the association said the downgrade was “in line with expectations given the UK’s recent vote to leave the EU and the subsequent lowering of the UK governments rating from AAA to AA.” 

“Apex will continue to closely monitor its debt levels and adjust its plans accordingly if necessary,” it added.