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Home Group raises £350m via new bond

Home Group, one of the UK’s largest housing associations, has raised a potential £350m via a bond deal in order to fund the building of more homes.

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Home Group raises £350m via new bond #ukhousing

The 24-year secured bond has been priced at an effective fixed rate of 3.24% – one of the lowest overall rates achieved in recent comparable deals agreed by housing associations.

The bond’s spread – its cost above the equivalent price of government borrowing, or gilts – was 1.7%.

Last week, Bradford-based Incommunities raised £250m on the bond markets at an all-in rate of 3.25% which was 1.57% over gilts.

Earlier in the month Metropolitan Thames Valley had raised £100m at 3.24% and a spread of 1.75%, while Future Housing Group raised £310m at 3.375% and a spread of 1.68%.

At this time last year, Optivo issued a similar bond at 1.4% over gilts but a similar all-in cost.

The bond is structured so that Home Group can draw down £250m from investors now with an option to for a further £100m at a future point.

The money will be put toward Home Group’s ambitions to build more homes for social and affordable rent, shared ownership, supported homes and homes for sale, it said. Home Group, which was established in the 1930s, currently owns around 55,000 homes.


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Investor feedback on the deal, which was over oversubscribed two and half times, was “extremely positive”, Home Group said, thanks to the company’s strong management, governance record and the fact its homes are spread across the country.

The company held roadshows with investors in London and Edinburgh last week.

Mark Henderson, chief executive of Home Group, said: “This is a great deal, and one that reaffirms Home Group’s strength as an organisation.

“The deal will go a long way in helping us to achieve our mission to build homes, aspirations and independence. It will also support our target of delivering 10,000 homes by 2022.”

HSBC, Mitsubishi UFJ Financial Group and NatWest Markets were bookrunners on the deal, while Centrus were treasury advisors.

Update at 9.15am on 27.3.2019

A previous version of this story said housing association Optivo had issued a bond this month, when in fact it was issued in March 2018

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