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Bond aggregator completes £10m issue for Welsh housing association
Bond aggregator The Housing Finance Corporation (THFC) has priced a £10m issue from its retained bond.
Welsh housing association Rhondda will borrow the money at an all-in rate of 3.27%, at 1.52% more expensive than government borrowing.
THFC brings together groups of housing associations to issue bonds they would not be able to issue on their own.
In this case, the £10m was tapped from its existing retained bond, THFC Funding No 3, a vehicle which has now provided almost £1bn of funding to social landlords.
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Brian Pickett, finance director at Rhondda, said: “This funding is vital to continue Rhondda Housing’s ambitious development programme, building much-needed affordable housing for residents across the Rhondda Cynon Taf area, with sites in Aberdare, Pontypridd, Talbot Green, Llanharan and Pentre. The interest rate achieved means our tenants’ rent can go even further.”
This is the second retained bonds sale from THFC to a Welsh housing association this year. Both have been the lowest all-in rates achieved over the life of THFC Funding No 3.
Piers Williamson, chief executive of THFC, said: “This latest deal highlights the effective nature of the THFC bond programme, which has yet again proved its capability of providing cost-effective finance to a diverse range of clientele across the UK.”
THFC returned to its own bond programme just over a year ago as the Affordable Housing Finance programme of debt guarantees from the government came to an end with a £186m issue.
That issue was priced at 1.2% above government borrowing rates (the ‘spread’), but the cost of borrowing for housing associations across the sector has risen since then, leading to a spread of 1.52% this time around.
THFC is not alone in finding borrowing more expensive in 2018, with Great Places pricing a £75m bond at a spread of 1.4% in March, the same as Optivo’s in that month.
The government announced a return to guarantees in last year’s Autumn Budget, with Inside Housing reporting at the time that the £8bn of announced funds could be used for affordable housing, something not revealed in the chancellor’s speech.
This was given further weight last month in the long-awaited Social Housing Green Paper, which included provision for loan guarantees to housing associations.
