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Moody’s: associations will need £5.3bn of funding this year
Housing associations will need funding worth about £5.3bn for 2018/19 and about £8.6bn for 2019/20, credit rating agency Moody’s has said.
In a report on regional and local governments around Europe, Moody’s made the estimate and predicted that housing association borrowing will continue on an upward trend.
Borrowing by housing associations has been rising consistently for some time, with the Regulator of Social Housing reporting that sector borrowing went up by a third in the last financial year.
It found that housing associations had agreed £10.1bn of new facilities in the year to March 2018, up from £7.6bn in the previous year.
The Moody’s report added: “Bond issues and private placements will likely account for a slightly smaller share of new funding over the next three years, at around 50% as bank loans become more competitive.”
In the last few years, the sector has seen new entrants and re-entrants of bank lenders into the sector. BNP Paribas was the most recent, returning to the sector with a £50m revolving credit facility with A2Dominion and a £100m loan to L&Q, London’s largest housing association.
One of the more significant entrants, back in 2015, was Japanese bank Mitsubishi UFJ Financial Group, which has now put well over half a billion pounds into the sector.
The increase in the number of lenders to the sector could be one mechanism that would lead to, what Moody’s predicts, more competitive bank loans.
