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Large London housing association issues £400m bond
Hyde Housing has secured £400m through a bond secured at a coupon of 1.75%.
In an announcement to the stock market yesterday, the large London housing association revealed it had secured the money through the bond, which has a £50m retained element. The £50m retained portion may be used for further refinancing or investment in the future.
Hyde said that the 1.75% rate was one of the “lowest rates ever achieved in the long-date sterling bond market”. It was borrowed at 130 basis points over gilts, the cost of government borrowing. It was nearly three times oversubscribed.
According to the 50,000-home landlord, the bond was launched with initial pricing guidance of 145 basis points, but exceptional demand from investors helped the lead banks on the transaction – Barclays, HSBC and NatWest – to lower this to a final pricing level of 130 basis points.
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Hyde said the bond will be used to refinance other long-term facilities, which will significantly reduce overall interest payable going forward and therefore strengthen interest cover and credit rating metrics on a long-term basis.
The last bond issued by Hyde was back in 2017, when it raised £400m for 35 years at 3% through its subsidiary Martlet Homes. It also raised £200m through a 30-year bond back in 2010.
The £50m retained portion of the bonds issued may be used for further refinancing and/or investment requirements as appropriate.
It is the latest bond to be secured at a low rate by a major housing association in recent times. Last week Midlands landlord Platform Housing Group issued its first ever bond, securing £350m at 1.625%. Optivo, Sovereign, Sanctuary and Clarion have all secured financing at low rates during the coronavirus crisis.
Rod Holdsworth, chief financial and resources officer at Hyde, said: “This is an excellent outcome for Hyde and I would like to thank everyone involved.
“The savings we will make on interest payments puts us in a great position to deliver on the aspirations we set out in our strategic plan 2050 and ultimately, to build more homes for people who need them.”
EY supported Hyde as its independent financial advisor on the deal, which took place under an accelerated timeline of eight weeks.
