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The Housing Finance Corporation (THFC) has priced its latest bond tap of £60.5m.
THFC, an aggregator which brings together groups of housing associations to issue bonds they would not be able to issue on their own, priced a £60.5m tap of its existing vehicle, THFC Funding No. 3, which is now worth just over £900m.
It achieved an interest rate of 1.43% more expensive than government borrowing – the ‘spread’ - for its four housing association clients, with an all-in cost of 3.344%.
This is a similar spread to recent bond issuances from larger housing associations. Great Places’ £75m bond was priced at 1.4% over government borrowing – the same spread that Optivo’s £250m bond achieved.
L&Q’s £500m bond was cheaper, at 1.18% and 1.35% more expensive than government borrowing, for the short and long-term tranches of the bond respectively.
The four associations involved in the transaction were Wales & West, Trent & Dove, Hexagon and United Welsh.
Piers Williamson, chief executive at THFC, said: “Housing associations are increasingly dependent upon capital markets, as banks shy away from long-term deals. This surge in housing association activity, as shown recently, can widen overall credit spreads. However, THFC has weathered these conditions to deliver a respectable pricing on a large bond.
“This will help recognise the sector’s collective goal to deliver competitively priced long-term funding, support the borrowers’ business plans and the delivery of more affordable homes across the country.”
THFC started issuing bonds again in July last year, after a four-year hiatus during which it was managing Affordable Housing Finance, the scheme of government-backed loans for affordable housing.
This scheme is now all but ended, although Nick Walkley, chief executive of Homes England, told Inside Housing that there is “definitely” scope for some of the £8bn of loan guarantees announced in the Autumn Budget to be used for affordable housing.