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THFC taps £1bn bond to provide finance for two small housing associations
Social housing bond aggregator The Housing Finance Corporation (THFC) has tapped its £1bn loan to provide £16m in funding to two small housing associations.
The all-in rate on the tap of the Funding No.3 bond was 2.10% over 22 years, which THFC said “represents a solid result, particularly for smaller associations like those to whom the proceeds have been on-lent”.
Inquilab, a 1,300-home landlord that provides housing to Black and other ethnic minority communities in west London, will use £10m of the funding to support its development programme.
Welsh Valleys landlord Merthyr Tydfil Housing Association becomes a new THFC borrower and will use the remaining money to increase its 1,147-home stock by around 200 units by 2025.
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The tap was priced at a spread of 102 basis points over gilts – the government cost of borrowing.
According to THFC, the Funding No.3 bond is the largest in the sector at £1.055bn, having recently been bested by its Blend subsidiary, which now stands at £1.098bn.
THFC now has more than £7.8bn of outstanding issuance across its group and around 160 housing association borrowers, making it the largest mutual lender to the UK social housing sector.
Piers Williamson, chief executive of THFC, said: “Our Funding No.3 bond has been an important source of funding for associations of all sizes for a decade, consistently delivering highly competitive costs of funds.
“This ability to provide consistency and equality of access for all our borrowers is a core part of THFC’s model and purpose.
“In our 34-year history we have endured recessions, political uncertainty and a pandemic, so while inflation may present new challenges to the sector, we will still be there to support them in the way only THFC can do.”
Eric Nelson-Addy, director of finance and resources at Inquilab, said: “Today’s pricing represents a great result for Inquilab, allowing us to build up resilience in our business plans.
“Tackling the chronic shortage of affordable housing requires associations to evolve in a sustainable and impactful way and locking in long-term funding at low rates is a key part of that evolution.”
Samantha Taylor, director of corporate services at Merthyr Tydfil Housing Association, said: “Having now become a THFC borrower we look forward to strengthening this relationship as we continue to provide quality affordable homes for Merthyr Housing’s residents.
“Securing funds at such a great rate allows us to support our ambition to grow and invest in our stock and enhance the services we provide tenants.”
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