You are viewing 1 of your 1 free articles
Large housing association Moat Homes has agreed an innovative bond deal worth up to £190m to provide it with funds immediately after the UK is scheduled to leave the European Union.
South East-based Moat completed a forward purchase agreement to tap an existing bond, which is due to be repaid in 2041, for an extra £100m.
Under the agreement, it will not borrow the money straight away, but will receive it from investors on 8 November 2019, eight days after the date on which prime minister Boris Johnson has promised to take the UK out of the EU.
Moat, which manages 20,000 homes, will borrow the money at an overall interest rate of 2.58%. Moat did not disclose how much more expensive this was than the cost of equivalent government borrowing, but judging by the latest information from the market for a 20-year deal it would be about 1.57% more expensive.
Historically, this is relatively cheap, but it is a wider spread than the two bonds issued by Accent Housing and Clarion Group last month, which both priced at 1.3% more expensive than the cost of equivalent government borrowing.
The interest rate will also generate an additional premium of £40m, meaning Moat will receive a total of £140m on 8 November.
It also plans to tap the bond again on that date for another £50m. That money will be retained to be issued at a later date, meaning its current plan will eventually provide it with £190m.
Greg Taylor, executive director of finance and corporate services at Moat, said: “We are delighted with the all-in rate we have achieved with this financing ahead of the uncertainties surrounding the potential Brexit date.
“This transaction is very security efficient for Moat since underlying security is required to support the principal amount only. These funds will support Moat’s development programme over the coming years.”
Housing associations borrowed a record £4.5bn in the three months before the first Brexit deadline on 29 March, according to figures from the Regulator of Social Housing, with sector figures telling Inside Housing they were raising money to be able to cope with a possible no-deal Brexit.
The past couple of months have again seen associations gradually ramping up their fundraising activities, as Mr Johnson’s pledge to see Brexit through on 31 October increases fears that the UK will leave the EU without a deal in place.
A2Dominion’s surplus falls by 74%
Aster's surplus rises as it eyes land acquisitions
BPHA surplus falls after bumper year of spending
Catalyst's surplus plunges 45% as sales market slows
Clarion’s surplus falls for third year running
Hyde reveals £17m spend on fixing post-Grenfell defects
Metropolitan Thames Valley shared ownership surplus tumbles
Network Homes boost surplus by 62%
Notting Hill Genesis customer satisfaction rate only 65%
Paradigm’s surplus falls slightly thanks to development difficulties
Peabody's self-imposed rent cut hits margin
Optivo returns to surplus after refinancing
Orbit surplus falls 52% as sales income slips
L&Q sees surplus drop by 42% in ‘challenging’ year
Southern reports 14% slide in surplus as fire safety checks increase
Sovereign's private sales income up 24%
Stonewater sees surplus fall by 43%
Swan surplus dives as cost to fix ACM cladding remains uncertain
WM Housing swings back into the black ahead of rebrand