Platform takes advantage of falling gilt rates with £250m sustainability bond
Platform Housing Group has moved quickly to take advantage of falling gilt rates to secure a £250m sustainability bond.
Platform Housing Group has moved quickly to take advantage of falling gilt rates to secure a £250m sustainability bond #UKhousingThe deal marks the third issuance under the Midlands-focused landlord’s £2bn Euro Medium-Term Note (EMTN) programme.
The £250m bond has a 14-year maturity and was priced at government gilts plus 0.75%, considered a record-low borrowing spread for issuances across the sector.
The combined gilt produced a coupon and yield of 5.52%. The landlord explained there was significant demand for the transaction, with order books nearly five times over-subscribed and 60 investors taking part.
Rosemary Farrar, chief finance officer at Platform, said: “The strong performance of this issue is supported by our ongoing engagement with the debt investor community and reflects Platform’s focus on balancing investment with maintaining financial strength.”
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The cash will be used in accordance with the 50,000-home landlord’s Sustainable Finance Framework to fund the development of new housing up to an energy performance certificate rating of Bands A and B, alongside retrofit works to its existing stock.
Ben Colyer, group treasurer at Platform, said: “The transaction was a great ‘proof-of-concept’ for our EMTN programme and investor relations strategy.
“Gilt rates had been steadily falling and were sat at year-to-date lows, so we decided to move quickly and were able to issue in under two weeks, including intra-day issuance on the day of announcement.
“The low gilt rate was supported by a record-breaking low spread for the sector. There are never guarantees about the future path of rates, which could go down further, but on balance we’re delighted with the trade.
“In the week running up to issuance we had daily hedging reviews so that we could strategically decide if we wanted to fix rates. The £100m gilt-lock that we entered into enabled us to save some further basis points off of part of the deal and more importantly, spread the interest rate risk as we headed closer to execution.”
To support Platform’s interest rate risk management, a gilt lock derivative was entered into, which fixed the gilt rate for £100m out of the total £250m issuance.
Lloyds Bank Corporate Markets, Barclays and HSBC acted as active bookrunners on the transaction. Bevan Brittan and Addleshaw Goddard provided legal counsel, Savills undertook security valuations, KPMG were the auditors and M&G acted as bond trustee.
Ms Farrar added: “We are incredibly pleased that our debt investors recognise the huge attractiveness of the social housing sector and continue to support funding the excellent projects we invest in.
“These investments help to make significant social and environmental improvements to the communities in which we operate, as we push ahead with our ambitious development and decarbonisation strategies.”
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