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L&Q secures £500m bond
London’s largest housing association has priced a £500m bond, split into two tranches with differing maturities.
L&Q secured the bond, intended to cover “ambitious” growth plans, on Thursday.
The first tranche of £250m has a 12-year term of maturity and a spread of 1% above the cost of government borrowing. At government gilt rates of 1.25%, this adds up to a total coupon of 2.25%.
The second tranche of £250m is a longer-term deal, with a maturity of 40 years. With government gilt rates for that period set at 1.7%, the coupon on that tranche is 2.75%.
The prices were reached after last week’s roadshows for investors.
According to ratings agency Moody’s, the debt will be secured by a portfolio of social housing properties owned by L&Q worth £620m.
L&Q declined to comment on the bond issuance.
When the group released its financial statement two weeks ago, though, Waqar Ahmed, group director of finance at L&Q, said: “To deliver our ambitious strategic objectives, we needed to adapt our capital structure that allows simplicity and flexibility and more flexible covenant structures that not only support our ambition to enable the delivery of 100,000 homes, but also provide flexibility between social and commercial activities.”
