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Wheatley bond due to price
Scotland’s largest social landlord was due to issue a bond of at least £250m this week, in a deal set to have wide significance for other stock transfer landlords entering the capital markets.
Wheatley Group began approaching investors on Monday, following an AA-rating for the 46,000-home Glasgow-based landlord from Standard & Poor’s.
The bond, which could be up to £500m, will be the largest issued by a Scottish landlord and among the largest issued by a landlord that has recently taken on large volumes of stock from a local authority.
Wheatley Group includes 41,500-home Glasgow Housing Association and is part way through an expensive regeneration scheme, which saw it post a deficit of £3m last financial year.
Adrian Bell, head of debt markets UK for Canaccord Genuity, said: ‘Theory would suggest such a big issue should get quite a low price.
‘But there are two other issues – firstly, it is 100% Scottish, and we don’t know how investors feel about that following the referendum.
‘Secondly, this is quite challenging credit because it is halfway through a regeneration programme and aren’t making money at the moment, even though it may be in five years.
‘We are watching this deal with interest, because it will be significant for other [stock transfer] landlords.’
Another expert, who did not want to be named, said the deal was likely to be more expensive than Guinness – which priced at a spread over gilts of 1.3% last month.