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Moody’s has affirmed the credit ratings of 39 housing associations, including some of the country’s biggest, and said the sector should remain “resilient” to the risks facing the UK.
Despite changing its current outlook on the UK as a whole from ‘stable’ to ‘negative’ last week, the ratings agency said this is likely to have “limited” impact on the social housing sector.
L&Q, Clarion, Peabody, Places for People, Orbit and Optivo are among those to have their ratings reaffirmed by the agency.
Last week, Moody’s also warned that the UK’s credit rating could be downgraded as Brexit has caused “paralysis in policymaking”.
But in a boost for the sector, Moody’s said: “There are no material changes planned to the legislative or policy framework for housing associations, and the regulatory framework remains stable.”
The agency said associations faced “limited risks” from a weakening of the UK’s fiscal strength.
It added: “Housing associations have adjusted to lower levels of capital grant since 2010 and, in the past year, capital grants have increased in the form of multi-year strategic partnerships supporting long-term planning.”
The agency noted that social rent policy is returning to inflation-linked growth which will be “credit positive for the sector’s financial performance”.
It added: “Although a lower growth environment is credit negative, Moody’s expects the sector to remain resilient.”
Some major housing associations have been pulling back on their exposure to private sales as the property market has taken a sharp downturn from Brexit-related uncertainty. In September, Inside Housing revealed that London giant L&Q has paused new development projects blaming a “serious downturn” in the market.
Moody’s acknowledged that although associations have been opening themselves up more to the commercial market, social rents still accounted for the “majority” of turnover and associations have a strong “core counter-cyclical business”.
Of the housing associations it rated, market sales accounted for less than 20% of turnover, it said.
The agency added: “In the event of a severe market downturn, although short-term pressures would emerge, Moody’s expects the majority of issuers would pull back on market sales development and liquidity would be sufficient to counteract the reduction in cash flows.”
On environmental, social and governance factors, Moody’s noted that the Grenfell Tower fire, in which 72 people died, had “encouraged higher health and safety standards and led many housing associations to increase spending on the quality of their existing stock”.
By contrast, five councils had their outlook changed from stable to negative but retained their credit rating. The five local authorities are: Aberdeen, Cornwall, Guildford, Lancashire and Warrington.
Moody’s warned of “higher systemic risk” due to a a potentially weaker sovereign rating for the councils. Higher spending pressures, particularly around social care and housing, combined with the “risk of weaker business rate growth and lower returns on commercial projects” was also a factor.
The agency also flagged “weaker sovereign institutional strength leading to the potential for further policy and legislative delays on key issues for the sector including business rates devolution and reform of the adult social care system”.
Housing association | Rating |
---|---|
Alliance Homes Group | A1 |
B3 Living Limited | A3 |
Bromford Housing Group Limited | A2 |
Clarion Housing Group Limited | A3 |
Affinity Sutton Capital Markets plc | |
Circle Anglia Social Housing 2 Plc | |
Circle Anglia Social Housing Plc | |
Clarion Funding plc | |
Connexus Housing Limited | A3 |
Herefordshire Capital Plc | |
Cottsway Housing Association Limited | A3 |
Flagship Housing Group Limited | A2 |
Grand Union Housing Group | A3 |
Grand Union Group Funding plc. | |
Great Places Housing Group | A3 |
Hastoe Housing Association | A3 |
Hastoe Capital Plc | |
Jigsaw Homes Group Limited | A3 |
L&Q Group | A3 |
London & Quadrant Housing Trust | |
LiveWest Homes Limited | A2 |
LiveWest Treasury plc | |
LiveWest Capital plc | |
Longhurst Group Ltd | A3 |
Libra (Longhurst Group) Treasury Plc | |
Libra (Longhurst Group) Treasury No 2 Plc | |
Midland Heart | A1 |
Midland Heart Capital plc | |
Moat Homes | A2 |
Moat Homes Finance Plc | |
Newlon Housing Trust | A3 |
Notting Hill Housing Trust | |
GenFinance II Plc | |
Optivo | A2 |
Optivo Finance plc | |
Orbit Group Limited | A3 |
Orbit Capital Plc | |
Paragon Asra Housing Ltd | A3 |
Paragon Treasury Plc | |
Peabody Trust | A3 |
Peabody Capital No 2 plc | |
Peabody Capital Plc | |
ClwydAlyn Housing Limited | Baa1 |
PenArian Housing Finance Plc | |
Places for People Homes Limited | Baa1 |
Places for People Capital Markets PLC | |
Places for People Treasury Plc | |
Poplar HARCA | Baa2 |
Poplar HARCA Capital Plc | |
Radian Group Limited | A3 |
Radian Capital Plc | |
Radius Housing Association Limited | A1 |
Riverside Group | A1 |
Riverside Finance Plc | |
Saffron Housing Trust | A3 |
Saffron Housing Finance Plc | |
Sanctuary Housing Association | A2 |
Sanctuary Capital Plc | |
Saxon Weald | A3 |
Saxon Weald Capital plc | |
Southern Housing Group Limited | A3 |
Sovereign Housing Association | A2 |
Sovereign Housing Capital, PLC | |
Stonewater Limited | A2 |
Stonewater Funding plc | |
The Guinness Partnership Ltd. | A2 |
Together Housing Group | A3 |
Together Housing Finance Plc | |
Walsall Housing Group Ltd | A3 |
WHG Treasury plc | |
Citizen Housing Group Limited | A2 |
Citizen Treasury 2 Plc | |
Citizen Treasury Plc | |
Yarlington Housing Group | A3 |
Yarlington Treasury Services PLC | |
Yorkshire Housing Limited | A3 |
Yorkshire Housing Finance plc |