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East Midlands association completes £42.5m bond deal in difficult market conditions
Nottingham-based Tuntum Housing Association has arranged an unlisted £42.5m bond despite uncertain market conditions.
A debt facility agreement between the association and an arm of Australian bank Macquarie worth £42.5m in upfront funding with third-party funding from a UK insurer and pension fund paved the way for Tuntum’s first bond.
The deal struck with Macquarie Infrastructure Debt Investment Solutions (MIDIS) also includes a £50m ‘shelf facility’ – an agreement allowing Tuntum to borrow additional funds under the same terms as the initial deal.
Tuntum’s debt facility marks MIDIS’ fifth financing in the UK social housing sector, having previously arranged debt for Alliance Homes, Shepherds Bush Housing Group, and Havebury Housing Partnership.
The bond, which matures in 2053, was arranged by TradeRisks. It has two tranches: a £32.5m spot tranche with a 2.743% coupon and a £10m one-year deferred tranche with a 2.852% coupon.
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Tuntum said the deal will help the association deliver its target of 280 new affordable and shared ownership homes in the next five years.
Junior Hemans, chair of Tuntum, commented: “This is a hugely significant step for Tuntum Housing Association, which will enable us to refinance some of our existing loans and provide us with the funds for more new homes.”
Antoine Pesenti, senior managing director of TradeRisks, noted: “This transaction shows [that] smaller locally focused housing associations can pursue capital from large institutional investors.”
Gareth Edwards, associate director at MIDIS, said: “We have been impressed with Tuntum’s commitment to support services, the great care given to the quality of its housing stock, and its approach to targeting new developments where they are needed most.
“In otherwise uncertain market conditions, our financing will support Tuntum to deliver its high-quality services while providing the certainty it needs to grow and support more vulnerable people living in the East Midlands.”
