Housing association Orbit has priced a £300m 18-year bond that was seven times oversubscribed.
The bond marks Orbit’s first venture into the sterling bond market since 2018 and achieved a coupon rate of 2% with a spread of 135 basis points (bps) over gilts, the government cost of borrowing.
The social landlord, which owns and manages 45,000 homes, noted “high levels of investor engagement” with the transaction. It received more than £1.75bn of orders, which the group said reflects the strength of its A3 stable credit rating and “market leading environmental, social and governance (ESG) credentials”.
Orbit said interest in the bond allowed it to achieve 20bps of price tightening.
The attractive pricing comes despite ratings agency Moody’s downgrading Orbit’s credit rating from A2 to A3 because of its large development programme and exposure to market risk. Orbit was one of the nine housing associations deemed to have the most market sale exposure.
Jonathan Wallbank, group finance director at Orbit, commented: “From the outset of this transaction, our objective was to attract as many quality investors as possible and position Orbit strongly in the market. We are therefore delighted by the landmark levels of interest received from the investor community, which is a clear reflection of Orbit’s strong credit fundamentals.”
He added: “This funding meets our corporate finance objectives and supports our vision at a time when affordable, quality homes and services are needed more than ever.”
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