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Notting Hill Housing prices £400m bond
Notting Hill Housing has priced a £400m bond issue that was originally delayed by work on its proposed merger with Genesis.
The cost of the debt will be 1.35% above the cost of government borrowing, meaning a total coupon of 3.25%, with the 2047 reference gilt yielding an estimated 1.93% at pricing.
All in, the funds will cost 3.29%, with a security of social housing assets. Inside Housing understands that no tower blocks were included in the security portfolio – their valuations could have been significant given the uncertainty that has persisted in the market for tower blocks since the devastating fire at Grenfell Tower in June.
According to Notting Hill, the portfolio was put together before this uncertainty became an issue, since the association had planned to issue the bond in March, before the fire.
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It had intended to issue a £250m bond over 40 years, but eventually opted for £400m and a longer-term maturity.
This issue was rated at A3 as a result of Notting Hill’s recently reduced credit rating, the result of a sector-wide downgrade from Moody’s. Notting Hill was singled out by Moody’s for failing to raise enough capital to cover certain planned developments, a direct result of the work being carried out on the merger.
This bond could resolve the issue, with Moody’s saying at the time that it could restore Notting Hill’s base credit rating if it were to raise the required funds.
The bond will be issued on Thursday and 96% of the investors will be fund managers, pensions funds and insurance companies.
The book runners on the deal were Barclays, HSBC, Lloyds and Santander. The funding advisor was Rothschild and the legal advisor was Devonshires.
