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L&Q gets A+ credit rating
London’s largest housing association has received a high credit rating from a ratings agency it has not used before.
L&Q received an A+ rating from Fitch, an agency which has not rated the association before, with a stable outlook.
This is higher than L&Q’s most recent rating from Moody’s, which downgraded its entire housing association portfolio over Brexit in September last year.
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Fitch said that the rating reflected the high demand for social housing in London and the South East and the continued income from L&Q’s rented properties.
It added: “The ratings also reflect L&Q’s moderate debt level with stable debt metrics and strong liquidity, which we expect to remain stable, despite the ambitious development plan to deliver 100,000 units within the next 10 years.
“The ratings further reflect the one-notch uplift Fitch applies to L&Q’s standalone ratings, driven by the application of the Government Related Entities Criteria and its assessment of four factors under the strength of linkage and incentive to support.”
Another agency, Moody’s, has rated L&Q as A3 with a stable outlook, the equivalent of two notches below its new rating from Fitch and from the third of the three major ratings agencies, S&P, which also rated L&Q A+ recently.
L&Q confirmed that it was not leaving Moody’s, as Notting Hill Genesis decided to in January.
That association’s shadow board decided that after the merger it would not seek a rating from Moody’s, but would instead be rated by Standard & Poor’s (S&P) and asked Moody’s to withdraw its rating on the organisation’s recent bond issue.
Following this, Moody’s downgraded Notting Hill because of the agency’s view that its merger with the lower-rated Genesis would hit profitability in the medium term.
The association’s new ratings agency, S&P, assigned it an A+ rating with a negative outlook, stating: “Given [Notting Hill Genesis’] size, we anticipate that it would show greater resilience in a pronounced downturn in the housing market than the previously separate entities.”
