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Housing association bond aggregator Blend Funding has tapped its benchmark 28-year bond, raising £125m at an all-in rate of 2.25%.
Proceeds from the tap, which achieved a spread of 1.68% over the government cost of borrowing, will go to WDH and The Regenda Group.
The transaction was three times oversubscribed with interest from two new overseas investors, according to the A2-rated aggregator (rating from Moody’s), which is a subsidiary of The Housing Finance Corporation (THFC).
It follows a spate of oversubscribed own-name bond deals from associations such as Sovereign, Together Housing, The Guinness Partnership and Sanctuary, which were achieved despite market disruption caused by coronavirus.
The yield of 2.25% marks the third sub-3% rate by THFC in 2020 alone.
John Austin, director of finance at 30,000-home WDH, said: “Today’s transaction has been a long time in the works, and it was clearly worth it.
“We’re very pleased to have got through Blend such a low cost of funds, and thanks to the ease of the whole process we will be able to use these funds straight away to support our business model and deliver for our communities.”
Tony Russell, executive director of resources at 11,000-home Regenda, said: “Our first experience with Blend was smooth and straightforward, but now as a member of the borrower pool we have been able to access the markets with even greater ease to take advantage of positive conditions in the capital markets and meet our funding needs to further our regeneration strategy.”
Regenda secured a £25m bond issued through Blend in June last year.
Piers Williamson, chief executive of THFC, noted that housing associations are seen by investors as low-risk, long-term investments.
He added: “It has been noticeable throughout the past seven weeks that investors have noted the defensive qualities of housing associations.
“We have been able to demonstrate very effectively the concrete steps that associations are taking to mitigate operational risk as well as development and sales risk.”
Update at 17:40 14.05 : Story initially said the transaction was THFC’s third sub-35 rate achieved in 2020. This has now been changed to sub-3%.
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