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Experts predict busy start to 2018 for HA bond market

Housing associations are likely to be particularly active in the bond market at the start of 2018, experts have predicted.

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Picture: Getty
Picture: Getty
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Experts predict an increase in housing association bond issues at the start of 2018 #ukhousing

Increasing development aspirations will lead to more bond issues, say experts #ukhousing

Refinancing, new development and changes in tenure are all driving an increasingly busy HA bond market #ukhousing

Speaking to Inside Housing, experts on social housing bond issues said that increasing development aspirations, refinancing requirements and the low cost of borrowing would encourage more providers to issue bonds.

Howard Webb, director at Capita Asset Services, told Inside Housing the market would be busy in the first quarter “and possibly the second quarter”.

He said: “[It’s being driven by] housing associations’ development programmes changing as a result of greater emphasis on social rented and affordable rented properties as opposed to shared ownership, some big refinancing requirements and a general sense that these rates look good.

“[Housing associations are thinking] ‘how much longer are they going to continue? Let’s get something done now rather than waiting until we desperately need the money’.”


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The second half of 2017 saw a number of housing associations issue bonds. L&Q issued the largest, worth £500m, in July.

However, in the years following the social housing rent cut in summer 2015, the bond market was quieter than it had been as providers re-appraised programmes. A shift towards more sales products also pushed shorter-term funding.

Adrian Bell, director and head of social housing at JCRA, echoed Mr Webb’s view, adding: “I think the Affordable Housing Finance programme [government-guaranteed debt which offered cheaper finance] is winding down, I think people’s development programmes are conversely winding up. Certainly, development aspirations are winding up.

“Therefore, they have an increasing funding requirement. They have a steadily rising refinancing requirement at the same time, so their call on the financial markets overall is just going up.”

Gerhard Oberholzer, director of bond aggregator GB Social Housing (GBSH), said he also expected the market to be busy early in 2018, but cited a looming Brexit as a key factor.

He said: “It’s not March 2019 [when the UK will leave the EU] that investors are focusing on. They’re looking at parliamentary sessions after the summer recess next year. If you calculate backwards in terms of workflows, if you’re coming to market by May/June, you may be too late.”

GBSH has already announced its intention to issue in early 2018 and Mr Oberholzer predicted an issue from the Housing Finance Corporation, another bond aggregator.

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