Metropolitan Thames Valley Housing (MTVH) has become the latest housing association to raise funds through a sustainability bond, bagging £250m to help it build energy-efficient homes and retrofit existing stock.
The 58,000-home landlord has secured the 15-year bond at a coupon rate of 1.875% and a spread over gilts of 115 basis points (bps), priced through its new European Medium-Term Notes (EMTN) programme. The all-in cost of funds was 1.999%.
It is part of MTVH’s aim to build 6,000 energy-efficient new homes over the next five years at an estimated total cost of £2.1bn.
MTVH joins fellow G15 landlords Clarion and Notting Hill Genesis, as well as Paradigm and Aster Group, which have raised funds through the bond markets based on their sustainability credentials.
For its funding deal, MTVH has made a commitment that all new homes will at least have an energy performance certificate (EPC) rating of B. Its existing homes will also be EPC C by 2030, in line with the sector’s wider requirements and tied to the government’s net zero targets.
The measures are set out in the MTVH’s new sustainable financing framework, which also helped it secure the funding.
Of the new homes, 80% will be for affordable rents or shared ownership, the landlord said.
Like its peers, MTVH is facing major costs from decarbonising its stock, while for G15 landlords in particular fire safety work requires significant investment.
Earlier this month, MTVH became the third G15 landlord to be awarded the ‘Certified Sustainable Housing Label’, a pan-European initiative operated by German consultancy Ritterwald aimed at attracting environmental, social and governance (ESG)-hungry investors.
Landlords are measured on more than 30 criteria based on the the United Nations’ Sustainable Development Goals.
MTVH has previously sought finance based on its its green agenda. Last December, it took a £50m loan through French bank BNP Paribas, with the interest rate linked to environmental targets.
The London landlord was also an early adopter of the sector’s first Sustainability Reporting Standard, aimed at introducing consistency on how landlords report their ESG performance.
On the new bond issuance, Geeta Nanda, chief executive of MTVH, said: “Our commitment to sustainability in how we are building the new homes that the country so desperately needs was really welcomed by investors.
“We have a strong track record across the entire ESG agenda, but with this new resource we can do even more.”
Earlier this week, MTVH was also issued with a long-term issuer default rating of ‘A’ by agency Fitch Ratings. The landlord’s outlook was deemed ‘stable’.
According to Fitch, MTVH aims to build 13,700 new homes over the next 10 years, which will cost £4.7bn.
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