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Clarion taps existing bond for £100m
The UK’s largest housing association, Clarion, has raised an extra £100m from a bond it initially issued last year.
Clarion originally issued the bond, worth £250m, in April last year and has gone back to investors to expand that bond by £100m.
Because this is a tap of the previous bond, it will be due for repayment on the same date in 2048.
This time, however, the 125,000-home social landlord priced the tap at just 1.3% more expensive than the cost of equivalent government borrowing, getting an all-in interest rate of 2.708%.
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The original bond, by contrast, was priced at 1.37% higher than the cost of equivalent government borrowing, with a total interest rate of 3.125%.
Like the original bond, this was part of Clarion’s £3bn debt platform, which it launched in October 2017 to fund its plan to build 50,000 homes over 10 years.
This plan has taken a couple of hits since then, with Clarion missing its target for housebuilding two years in a row. Over the two years, it had intended to build 2,928 but managed only 2,506.
Gareth Francis, director of treasury and corporate finance at Clarion, said: “This issue underscores the value of our debt issuing platform, which enabled the group to take advantage of a supportive market backdrop and a low rate environment.”
Mark Hattersley, the group’s chief financial officer, added: “We are delighted to have obtained this at such competitive long-term rates. This funding will further support the group in its mission to provide much-needed affordable housing.”
A Clarion spokesperson also said that the bond, like the original £250m one, had been “heavily oversubscribed” by investors and that it was secured.
