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Two large housing associations access bond markets to raise a combined £225m
Sovereign Housing Association and Together Housing have braved the financial markets to secure bonds worth a combined total of £225m.
Two large housing associations access bond markets to raise a combined £225m #ukhousing.@sovereignha and @TogetherHousing increase liquidity with bond issues #ukhousingSovereign, which owns and manages 58,000 homes, issued a £125m bond retained from a previous issue worth £375m with a coupon of 2.375% for 29 years.
Together Housing Group issued a £100m tap of its existing £250m bond on 29 April at an overall yield of 2.113%.
The existing bond was borrowed at a rate of 4.5% and has a 2042 maturity date. The pricing was set at 150 basis points above gilts, the cost of government borrowing.
Further details will be released once the transaction completes on or after 6 May 2020.
The group said it would give them extra liquidity to build new units, invest in existing stock and fund various energy projects.
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Sovereign’s bond, issued on 24 April, was significantly oversubscribed at £800m and will strengthen the association’s liquidity position, allowing it to restart development sites in the post-COVID-19 recovery period, Sovereign said.
The issuance was executed in one day “to better manage potential market volatility” the association said.
Tracey Barnes, chief financial officer at Sovereign, said: “We saw very good demand from all of the key UK real money accounts, amassing a high quality order book with a number of triple digit orders.
“We priced at a final re-offer yield of 1.974% – the first ever sub-2% yield for a 20-plus year issuance in the sector.
“Despite these turbulent economic times, this confidence from investors really confirms Sovereign’s standing and financial strength, and means that we are ready to hit the ground running as soon as normal business operations resume.”
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