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Bond aggregator delivers second sub-3% loan to housing association
A bond aggregator has raised £20m for a housing association in the second deal it has delivered at an interest rate of below 3%.
Blend, the funding vehicle owned by aggregator The Housing Finance Corporation (THFC), borrowed the money for Wales & West Housing over 35 years at a rate of 2.92%, 1.43% more expensive than the cost of equivalent government borrowing.
This makes it one of the cheapest bond transactions in the social housing sector this year in terms of overall interest rate, beaten only by Clarion’s £250m bond issued in January.
That was priced at 2.72%, helped to a cheaper price by the fact its term length was just 10 years.
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Blend, however, has managed two issues at less than 3%, including £30m raised earlier this month for the housing association Hightown.
According to Blend and Wales & West, the transaction was first discussed at the National Housing Federation’s finance conference in Liverpool last week.
Piers Williamson, chief executive of THFC and Blend, said: “Three months ago, we were contingency planning for a disruptive market on Brexit day. I’m having to pinch myself that on 29 March we are actually pricing the longest-term deal we have ever done at THFC, and at one of the lowest rates.”
Stuart Epps, executive director for resources at Wales & West Housing, added: “We are delighted with the additional £20m that we have been able to secure from Blend. The speed of execution has been beyond our wildest dreams, with an exploratory conversation in Liverpool turning into an executed transaction just a week later.
“We are particularly pleased with the sub-3% rate and the term at 35 years, taking maturity into the 2050s. The money will be used to fund our ambitious development programme, developing over 500 badly needed new affordable homes a year, in order to play our part in making a difference to communities across Wales.”
