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Bond aggregator lends £27.5m to three associations despite ‘extreme market volatility’
The Housing Finance Corporation (THFC) has sold £27.5m of retained bonds in two deals on behalf of three associations during the past month.
The aggregator said that the deals for Trent & Dove, Durham Aged Mineworkers’ Homes Association and Soho Housing were secured despite the “extreme market volatility” caused by the invasion of Ukraine.
A total of £9.5m was placed at a spread of +130 basis points (bps) over gilts, the cost of government borrowing, giving an all-in cost of funds of 2.836% on 21 February. This was followed by a further £16m that was sold at 124.5bps over gilts on 30 March, giving an all-in cost of funds of 3.130%.
The bond aggregator said that the spread remained fairly stable, adding that this indicates that there is confidence confidence from investors in the businesses and the social housing sector more broadly, even amid the ongoing conflict in eastern Europe.
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The £16m will go to 6,000-home landlord Trent & Dove, an existing borrower in the group with affordable homes across East Staffordshire, South Derbyshire and North West Leicestershire.
The landlord has an existing loan through THFC’s Funding No 3 bond.
Proceeds from February’s trade went to Durham Aged Mineworkers’ Homes Association (£8m) in its first loan from THFC. The funding will go towards supporting its development plans.
Soho Housing, a landlord with around 800 homes across the London boroughs of Camden and Westminster, received £1.5m that will go towards refinancing its existing THFC loan, which matured in December 2021.
Jane Harrison, finance director at Soho Housing, said that the loan represents a new chapter in the landlord’s 25-year relationship with THFC.
She said that the funds will be “invested in improving our existing stock and developing much-needed affordable homes for our communities in Camden and Westminster”.
Piers Williamson, chief executive of THFC, said: “Today exemplifies the importance of THFC’s role providing reliable and consistent access to capital markets funding, even at a time of severe stress in the financial markets.”
The announcement follows a deal struck last month by Blend, a subsidiary of THFC, that saw three housing associations benefit from a £107m multi-tranche tap of its 2047 and 2054 bonds.
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