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More than 40 housing associations back planned £1bn bond issue
There are 45 housing associations backing aggregator Morhomes’ plan to launch a £1bn bond issue.
Morhomes, which is owned and run by 45 housing associations including Genesis, Sovereign and A2 Dominion, intends to launch the bond issue in the summer.
Each sponsor housing association has committed £20,000 to fund Morhomes’ initial activities, with the aim being to issue another £1bn bond the following year, and another the year after that.
The proposed bonds would be listed on the London Stock Exchange, but Morhomes itself will remain a private organisation.
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The aggregator hopes to reduce the cost of borrowing for its sponsor housing associations by around 0.3% compared to what they could achieve by issuing bonds in their own names.
Patrick Symington, interim chief executive of Morhomes, told Inside Housing he hopes to achieve this by marketing the organisation to a wider pool of investors using the credit reputation of the sector as a whole, rather than the credit ratings of individual associations.
He added: “Morhomes has been backed by 45 associations (and growing) and is well down the path of setting itself up for its first bond issue.
“Following a very well-attended session at the National Housing Federation finance conference we have some real momentum gathering, with the sector really getting behind the project.”
The borrowing vehicle was started in July last year by JC Rathbone Associates, which set up working groups to produce a comprehensive report in January.
It is owned and run by housing associations, with Neil Hadden, outgoing chief executive at Genesis, as chair. Three of its eight directors are Ann Santry, outgoing chief executive at Sovereign; Robert Young, chief executive at North West association Torus; and Matthew Bailes, chief executive of Paradigm.
Nick Jackson, director of business services and development at Plymouth Community Homes, which is one of Morhomes’ sponsor housing associations, told Inside Housing: “There is a feeling that the sector isn’t getting the right sort of spreads that relates to the credit rating of the sector.
“If, with the combination of all the investors involved, we can start to get to a public issue of around £1bn, the feeling is we can attract much better spreads in the market, which obviously reduces the overall cost of funding.”
Update: at 17.10 on 27.3.18 This story was updated to clarify that the three directors named are not Morhomes’ only directors.
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