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Full list: 45 housing associations have credit ratings affirmed
A total of 45 housing associations have had their credit ratings affirmed by ratings agencies and only one received a downgrade, despite a recent downgrade to the UK sovereign rating.
An update from Moody’s showed that 39 UK housing associations have maintained their existing ratings and it expects housing associations to “remain resilient” due to strong liquidity positions.
A further six housing associations were affirmed by Fitch Ratings and just one – A2Dominion – received a downgrade.
Moody’s said: “While housing associations are likely to face lower revenue from market sales than previously expected and an increase in arrears, the sector benefits from a high degree of expenditure flexibility which enables management to reduce costs and alter development programmes in response to a weaker economic climate to protect financial performance.”
The agency justified stable outlooks across the board, arguing that “although a weaker economic climate may lead to higher arrears and voids and lower market sales income, the high baseline operating margins and demand for social housing will support continued strong operating cash flows”.
Moody’s also warned that these ratings could come under pressure if debt grows more quickly than forecasts, liquidity falls, interest cover ratios weaken or if there is lower government support for the sector.
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Fitch Ratings said its decision to downgrade 38,000-home A2Dominion “reflects deterioration of A2Dominion’s financial profile compared with our previous rating case”. The landlord saw its completions fall by more than half in the year while its surplus dropped slightly.
Dean Tufts, executive director of finance and strategy at A2Dominion, said: “Our rating is important to us and we continue to monitor our performance alongside our ambition to develop more urgently needed housing.
“It’s comparable to others within the sector and just below that of most high street banks. We remain a very stable business with a model that promotes long-term security.”
Commenting on the housing association sector, Fitch Ratings said: “RPs [registered providers] benefit from strong and predictable cash flow from their social rented properties, which are largely secured by public funds, through housing benefits paid by the state.
“In Fitch’s view, this limits a sharp rise in unpaid rents in an economic downturn, as has been demonstrated throughout the COVID-19 pandemic.”
The ratings come as a boost to the sector shortly after the UK sovereign was downgraded from Aa2 to Aa3 by Moody’s, which cited a weakening economy as a result of COVID-19 and Brexit.
Moody’s assessment of 39 UK housing associations was produced alongside ratings for five UK local authorities and seven universities including Oxford and Cambridge.
Aberdeen City Council, Cornwall Council, Guildford Borough Council, Lancashire County Council and Warrington Borough Council were all handed downgrades, with Moody’s citing a “lack of clarity on long-term funding for the sector”.
Social housing bond aggregator Blend, part of The Housing Finance Corporation (THFC), also had its A2 stable rating reaffirmed by Moody’s which said the rating reflects its view that participants in Blend’s pool “are resilient to economic and fiscal weakening”.
The lender welcomed its 12th borrower at the end of October, which marked its third bond issue in the month.
Piers Williamson, chief executive of THFC and Blend, commented: “With the Sovereign rating now sitting only two notches above Blend, the perceived defensive qualities of investing through aggregators such as Blend, or directly, is clear – particularly during the current pandemic.”
Full list of housing associations’ credit ratings
| Name | Rating | Movement | |
|---|---|---|---|
| Moody’s | |||
| Abri (Radian) | A3 stable | ||
| Alliance Homes | A1 stable | ||
| Bromford | A2 stable | ||
| Citizen | A2 stable | ||
| Clarion | A3 stable | ||
| ClwydAlyn Housing | Baa1 stable | ||
| Connexus Housing | A3 stable | ||
| Gateway Housing Association | A3 stable | ||
| Flagship Homes | A2 stable | ||
| Grand Union Housing Group | A3 stable | ||
| Great Places Housing Group | A3 stable | ||
| Hastoe Group | A3 stable | ||
| Hightown Housing Association | A3 stable | ||
| Jigsaw Homes Group | A2 stable | ||
| LiveWest | A2 stable | ||
| L&Q | A3 stable | ||
| Longhurst Group | A3 stable | ||
| Midland Heart | A1 stable | ||
| Moat | A2 stable | ||
| Newlon Housing Trust | A3 stable | ||
| Notting Hill Genesis | Baa1 stable | ||
| Optivo | A3 stable | ||
| Orbit | A3 stable | ||
| PA Housing | A3 stable | ||
| Peabody | A3 stable | ||
| Places for People | A3 stable | ||
| Poplar Harca | Baa1 stable | ||
| Radius Housing | A1 stable | ||
| Riverside Group | A1 stable | ||
| Saffron Housing Trust | A3 stable | ||
| Sanctuary Housing | A2 stable | ||
| Saxon Weald | A3 stable | ||
| Southern Housing Group | A3 stable | ||
| Sovereign | A2 stable | ||
| Stonewater | A2 stable | ||
| The Guinness Partnership | A2 stable | ||
| Together Housing Group | A3 stable | ||
| Walsall Housing Group | A3 stable | ||
| Yorkshire Housing | A3 stable | ||
| Fitch Ratings | |||
| A2Dominion | A stable | *Downgrade from A+ negative | |
| Great Places Housing Group | A+ negative | ||
| Hyde | A+ negative | ||
| L&Q | A+ negative | ||
| Notting Hill Genesis | A stable | ||
| Origin Housing | A negative | ||
| Places for People | A stable |
*Rating from Fitch Ratings and Moody’s on 3 November 2020
