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Aster raids bond market for £50m

Aster Group has raised £50m on the capital markets through a ‘tap issue’ of its 2013 bond, with a further £150m retained for later issuance.

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Aster raids bond market for £50m

Aster taps 2013 bond for further £50m

Aster funds 12,000-home development pipeline with new bond borrowing

The South West England-based landlord, which owns more than 30,000 homes, said the funding will be used to support a development programme of almost 12,000 homes over the next seven years.

The new borrowing was priced at a spread of 1.4% over gilts – the cost of government borrowing – giving an all-in cost of 3.35%, fixed for 25 years.

It is a ‘tap’ issue on the group’s £250m 30-year bond, sold in 2013. That issue was priced at 1.05% over gilts, but higher borrowing rates meant the all-in cost of funds was also higher at 4.5%.

A ‘tap’ bond issue is one in which the borrower sells bonds from a previous issue at current market price, but with the bonds retaining their original face value and maturity date.

Chris Benn, group finance director at Aster, said: “Our tap was oversubscribed and reflects the confidence investors have in our management and strategy as a leading developer and landlord.

“This funding will support our mixed funding strategy and our ongoing development plan which is building thousands of new high-quality homes across the South of England.

“Importantly, our programme comprises a mix of social and affordable rent, shared ownership and open market sale as part of our commitment to increasing choice in the market and tackling the UK’s housing crisis.”
The pricing of Aster’s bond is on a par with recent issuances from other landlords. Earlier this month, Longhurst raised £250m at a price of 3.347%, while Bromford issued £300m at 3.25%.

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