You are viewing 1 of your 1 free articles
UK’s largest housing association prices £300m sustainability bond at 1.25%
Clarion Housing Group has priced a £300m bond at a coupon of just 1.25%, the funds from which will be used exclusively to develop new energy-efficient affordable homes.
Clarion, the UK’s largest housing association with 125,000 homes, on Friday priced a £300m, 12-year bond with a spread of 95 basis points (bps) over gilts – the government cost of borrowing.
Gareth Francis, director of treasury and corporate finance at Clarion, told Inside Housing: “We took £300m after the order books reached roughly £850m from about 60 orders. We were convinced the demand was there and that allowed us to price attractively with a 1.25% coupon.”
Mr Francis said that Clarion will use the funds exclusively to invest in new energy-efficient affordable housing that aligns with the landlord’s sustainability framework.
The bond will also align with the Clarion-backed Sustainability Reporting Standard for Social Housing, which is due to be launched this week alongside The Good Economy, Optivo, Sovereign and Peabody after the groups produced an environmental, social and governance (ESG) white paper in May.
READ MORE
He added: “At an organisational level we are committed to being a sustainable organisation. That means that when we partner with anybody, including the funding community such as banks and investors, we want them to fit that profile.”
The working group behind the Sustainability Reporting Standard has estimated that the UK sustainable investment market stands at around £2tn in total.
Mr Francis added: “We will look to do more of this [sustainability-linked issuance] and we will probably be doing this for most future bonds, but not all.”
He noted that refinancing old bonds will not be done on a sustainable basis because it will not be funding new homes.
The transaction follows Clarion’s maiden sustainability bond in January 2020, which achieved a margin of 98 bps with a coupon of 1.875%.
Clarion currently aims to build 4,000 new homes each year, 80% of which will be affordable. The group also published its own ESG report, which outlines its performance across these areas.
NatWest, which acted as bookrunners on the deal alongside HSBC and Santander, said it is currently supporting “multiple organisations” in establishing new ESG frameworks.
Sign up for our development and finance newsletter
Already have an account? Click here to manage your newsletters
