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A bond set to be issued by a subsidiary of shared ownership company Heylo Housing will be worth £20m, the company has revealed.
In an update to the stock market, Heylo, which was set up in 2014 by the Lancashire County Council Pension Fund to provide shared ownership homes, said it would issue the bond on 29 October.
The 10-year bonds will pay interest semi-annually at an interest rate of 1.625% plus the Retail Price Index measure of inflation. The interest rate, however, will not fall during any period of deflation.
Heylo currently has over 1,650 homes in its portfolio which is worth over £300m, and has another 1,300 homes under contract.
Chris Hewitt, chief financial officer at Heylo, said: “We are pleased to issue our first retail bond paying inflation-linked income with deflation protection and secured over residential assets. We have an extensive pipeline of opportunities to grow our portfolio of affordable homes and we expect to deploy the funds raised from this bond almost immediately.
“As market conditions become more challenging, investors increasingly look for long-term, stable income opportunities. The unique stability and long dated nature of the inflation-linked income from part buy – part rent properties is attractive to both institutional and retail investors.
“Our retail bond issuance is the second in a series of strategies to diversify our sources of funding and build on our strong track record of delivery. We look forward to continuing to access both retail and institutional markets with a range of investment opportunities in the near future.”