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Stonewater receives A+ credit rating
One of the UK’s largest housing associations has received an A+ credit rating from agency Standard & Poor’s (S&P).
Stonewater received the rating along with a stable outlook which puts it at the upper end of the sector, less than two weeks after S&P downgraded five large housing associations over increases in their market sales programmes.
All of the associations downgraded by S&P have most of their homes in London, where the current housing market is seen as riskier than in the rest of the country.
In its judgement, S&P said: “The rating reflects that we expect Stonewater to demonstrate stable financial performance through efficiently managed costs and strong profitability from its expanding property portfolio, which focuses closely on traditional social housing.
“This will negate pressure from welfare reforms and mitigate risks from higher leverage as Stonewater pursues its development program, supporting balance sheet resilience through 2021. As such, we project debt service metrics to remain contained over our 2019-2021 forecast horizon.”
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The agency predicted that market-related activities at the association would, by 2021, account for around 17% of its revenues, which, it said, “could bring some uncertainty to profitability”.
This percentage, however, is relatively small compared with some in the sector, particularly London-based associations.
John Bruton, finance director at 31,500-home Stonewater, said: “This latest A+ rating highlights Stonewater’s strong financial performance in a challenging economic climate for social housing providers.
“We will continue to focus on increasing our investment in providing more good quality, affordable homes across a range of tenures.”
Stonewater issued £250m worth of bonds in November last year, but did not plan to raise any money from it immediately, instead retaining the entire bond to provide a flexible source of funding in future.
The association aims to increase the number of homes it builds annually, from 717 completions in 2016/17, to more than 1,000 new homes in 2019/20 and an additional 3,750 new social and affordable homes by 2022.
