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Incommunities given A+ credit rating
Bradford-based housing association Incommunities has received an A+ credit rating from Standard & Poor’s (S&P).
The rating puts Incommunities in an investment grade criteria and higher than some of its peers, although S&P raised some concerns about the area in which the provider works.
S&P said it had taken into account the fact that Incommunities operates primarily in Bradford and Huddersfield, where the “lower dynamism of population growth and lower market rents hamper demand for certain types of social housing”.
The agency said it expected Incommunities to continue to focus on providing low-income social housing, although noted that its areas of operations are challenging, demonstrated by higher vacancy rates and arrears levels than peers.
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It was positive on the company’s long-term financial stability, adding: “We expect Incommunities, through its business strategy and conservative financial policies, to mitigate its vulnerability to the effects of national welfare reforms such as Universal Credit and the 1% per year rent cut policy until 2020.”
The housing association’s plan to fund development through debt was found to be “conservative” and it is expected to complete a refinancing strategy by the end of the year, reducing its cost of debt.
S&P rated the company one notch higher than its ‘A’ stand-alone credit profile based on the likelihood that the government would provide sufficient support to the group in the event of financial distress.
“We base this view on Incommunities’ important role for the UK government and its public policy mandate, and its strong link with the government,” S&P said.
S&P added a negative outlook to the overall rating, suggesting that it could downgrade the housing association if it downgrades the UK as a whole.
