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Aggregator places £30m retained bonds with new borrower at 2.09%
Social housing bond aggregator Blend has priced £30m of retained bonds for Rooftop Housing Group at 2.09% for 34 years.
Rooftop, which owns and manages more than 6,500 homes, became Blend’s 12th borrower to date, with the association achieving a spread of 135 basis points (bps) over gilts, the government cost of borrowing.
The transaction, completed on Thursday, was four times oversubscribed and Rooftop will use the funds to support its development target of 1,000 new affordable homes by 2023. A further £20m of retained bonds are expected to be priced on a deferred basis for the housing association next week.
Blend, part of The Housing Finance Corporation, has now priced three deals in October with increasingly tightened rates. The aggregator’s two previous transactions this month ranged from 2.26% with a spread to 148bps to 2.17% with a spread of 133bps.
Its recent deal also represents a sector first aggregator deferred bond deal, according to THFC.
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Caroline Dykes, finance director at Rooftop, said: “The flexibility of Blend means that we can access funding on a spot and deferred basis at unparalleled low rates. This means we can support our development programme and continue to build new affordable homes for our communities over the coming years.”
The deal follows Blend receiving a confirmation of its ‘A2 stable’ credit rating from Moody’s while the UK sovereign rating was downgraded from Aa2 to Aa3.
Piers Williamson, chief executive of Blend, said: “It’s been a busy month for Blend, with some fantastic rates being achieved for our borrowers and genuinely ground-breaking developments on deferred drawdown deals.
“Despite the narrowing differential between the UK sovereign rating and Blend’s own rating, we have on this occasion been able to deliver an even lower cost of very long-term borrowing for a new client.
“Over the coming weeks we expect some considerable market volatility given economic and political developments, starting next week with the outcome of the US Election. It may be that a number of funds choose to shut up shop early this year, so it’s good to have got this sequence of deals put to bed.”
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