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THFC lines up bond issue as government guarantees end

Bond aggregator The Housing Finance Corporation (THFC) is lining up its first bond since 2013, following four years of issuing government-backed bonds to housing associations via a subsidiary. 

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THFC lines up bond issue as government guarantees end

It expects to price the bond, which will be issued on behalf of two unnamed housing associations, on Friday after a series of roadshows this week.

The move is a significant one, foreshadowing the imminent end of a popular programme of government guarantees. It marks THFC’s return to its pre-2013 business model of issuing bonds itself on behalf of groups of housing associations.


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The not-for-profit organisation ceased this activity in 2013 to administer £3.5bn of affordable guarantees on bonds from the government through its subsidiary, Affordable Housing Finance (AHF). This was part of a government scheme called the Affordable Homes Guarantees Programme.

Under this scheme, the government guaranteed debts issued by AHF, leading to much lower borrowing costs for housing associations. Some associations even managed to borrow more cheaply than the UK government. AHF carried out similar work to THFC, dealing with groups of housing associations too small to tap the capital markets on their own.

The scheme was scrapped in November 2015 by then-chancellor George Osborne, but AHF has continued to use the remaining funds since then. Without the government guaranteeing debts, housing associations will receive less favourable rates from investors.

Inside Housing understands that there is £166m left to be processed under AHF, and that this will likely be gone by the end of the summer. New applicants are not being accepted to the programme, as AHF is working through the pipeline of eligible borrowers that applied by March 2016.

With the demise of these funds, THFC has returned to regular bond issuing. One of the primary sources of funding for AHF, the European Investment Bank, could be less likely to provide funds in future, partly because the UK is leaving the European Union.

In November last year, the social housing sector called on the government to reinstate the scheme, without success. At the time, the National Housing Federation argued that because of the sector’s no default record, there would be no cost to the taxpayer.

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