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Sovereign issues £375m bond
Sovereign has issued a £375m own-name bond as it strives to build 1,900 homes a year.
The 58,000-home landlord paid an all-in rate of 2.475% on the 29-year bond, with £125m retained for future issue.
Thirty-four investors bought in on Monday, while the issue was oversubscribed to the tune of £1.2bn.
It came after Sovereign’s credit rating was last week reaffirmed as A2 and A+ respectively by agencies Moody’s and Standard & Poor’s, making it one of the highest-rated housing associations.
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Tracey Barnes, chief financial officer at Sovereign, said: “This is an excellent result and will allow Sovereign to continue to do more for people and places, delivering our ambitious plans and maximising our social impact.
“The strong book build and overwhelming appetite from investors really confirms Sovereign’s standing and financial strength, particularly given these turbulent economic and political times.”
Ms Barnes was appointed last month from drinks giant Diageo, becoming the third person to hold the post in the past 12 months.
Sovereign has issued two UK public bonds previously, in 2009 and 2012, and borrowed £250m from five different lenders in July.
Its five-year strategy involves stepping up development with a focus on major land-led schemes, trebling investment in community work, and improving customer services.
Lloyds Bank and NatWest Markets acted as bookrunners on this week’s deal.
Kirsty Garrett, associate director for debt capital markets at Lloyds Bank, said: “Investors were attracted to Sovereign’s scale, A2 / A+ credit rating and regional presence.
“This was supported by the strong performance of the management team during the roadshow, which helped generate a high-quality order book.
“The transaction ultimately priced tight to sector comparables and Sovereign’s existing bonds and sets a positive precedent for future issuance.”
Dominic Brindley, head of public sector at NatWest Markets, said: “The size and depth of the order book and the overall outcome is a great reflection of Sovereign’s sector leading credentials which bodes well for future issuances.”
Midlands housing association The Wrekin Housing Group also issued a £250m 29-bond last month, with a coupon of 2.5%.
