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WM Housing to issue £275m bond
WM Housing plans to issue a £275m bond which will be given a credit rating of A3, according to ratings agency Moody’s.
The 30,000-home housing association received the rating for its bond last Friday and intends to use the proceeds to refinance debt. The group plans to create a new financing vehicle to simplify its debt management.
The funds will be used to refinance more than a third of the debt held by the group’s subsidiaries, as well to supplement liquidity in the group. Repayment on the bond will be due in 2048.
WM Housing is fairly well placed to service its existing debt, with interest cover of 1.6 on its social lettings (earnings from social housing rents divided by interest payments owed).
It also has room to take on further debt; after issuing this bond, it will see its level of debt rise to 51% of its assets, roughly in line with most other associations that have A3 ratings.
The loan will be secured by a portfolio of social housing properties owned by Optima and Whitefriars, landlords which are both part of WM Housing Group.
WM Housing, like the rest of Moody’s social housing portfolio, was subject to a one-notch downgrade in its credit rating at the end of last month, when the ratings agency downgraded associations over its view of the country’s credit rating, which has reduced as the UK has edged closer to leaving the European single market and customs union.
The group also saw its governance rating downgraded by the Homes and Communities Agency (HCA) last week after the regulator decided it had failed to ensure the lawful level of protection over its eviction processes.
The Homes and Communities Agency said WM Housing evicted tenants from a temporary housing scheme without giving the legally required 28 days’ notice.
