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Optivo roadshows £250m bond to investors

Large London housing association Optivo is approaching investors for a £250m bond as it seeks to fund its programme to build 15,000 homes over the next decade.

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Picture: Getty
Picture: Getty
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Optivo roadshows £250m bond to investors #ukhousing

Housing association taking a more circumspect approach after turmoil in the global markets #ukhousing

The housing association said it had met around 25 investors since Friday, and had received a “strong response” to its financing plans, despite wider turmoil in the financial markets.

On Monday, more than £150bn was wiped off the value of Britain’s biggest companies as the FTSE100 endured its sharpest one-day fall since the height of the financial crisis 12 years ago.

But Optivo said that it intends to take a cautious approach to its fundraising and has no “immediate requirement for liquidity”.


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Paul Hackett, chief executive of Optivo, said: “The markets saw some unprecedented moves on Monday. Much as we’re encouraged by the positive responses of investors to our business and the quality of our credit, we don’t need immediate liquidity and wish to act as a responsible borrower.

“We continue to collect feedback and will monitor the market for a window suitable to issue our bonds.

“We’re a long-term business, so locking in the most advantageous long-term cost of borrowing is more important than speed.

“At the end of the day, we want the lowest all-in rate to enable us to build more affordable homes.”

Optivo currently owns and manages more than 45,000 homes across London, the South East and the Midlands.

Last year, it borrowed £50m in a three-year revolving credit facility from the biggest lender in the United Arab Emirates, First Abu Dhabi Bank – the first time the bank had entered the sector. Optivo also recently ended its final care home contract in order to focus on its core business.

On Friday, social housing bond aggregator Blend raised £25m for landlord Silva Homes at 2.26%, despite the “subdued bond market” of the past couple of weeks largely driven by the uncertainty in the financial markets caused by the coronavirus.

Blend, which is a subsidiary of The Housing Finance Corporation, tapped its benchmark £270m bond for the deal, at a spread of 1.4 percentage points over the cost of equivalent government debt (gilts).

Midlands-based landlord Longhurst also braved the markets this week, raising £100m through a bond sale to bolster its development plans. The bond, which was four and a half times oversubscribed, achieved an all-in rate of 2.34% and was 1.5 percentage points more expensive than the cost of government borrowing.

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