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Aggregator planning sector’s ‘first sustainability-accredited’ bond
Social housing bond aggregator MORhomes is planning to produce the sector’s first bond with sustainability accreditation from a second party, Inside Housing can reveal.
The aggregator, which issued its first bond last year, is in discussions with social landlords about launching a sustainability-linked bond aligning with International Capital Market Association (ICMA) principles.
Patrick Symington, chief executive of MORhomes, told Inside Housing: “A sustainability bond with a second party opinion, confirming the application of ICMA principles, has not been done before in the sector.
“This is an extension of what we are doing already because we currently have a social bond, but we are taking it further to become a sustainability bond.”
ICMA defines a sustainability bond as one where the proceeds are “exclusively applied to finance or refinance a combination of both green and social projects”.
Aligning with ICMA principles means “an investor does not have to do the research on MORhomes themselves, they can rely on the fact that there is an opinion already in place,” said Mr Symington.
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Environmental, social and governance (ESG) linked investment has become an increasingly prominent aspect of housing association borrowing, with large landlords such as Bromford and Optivo signing up to sustainability-linked loans this year.
Mr Symington said he expects to adopt the bond framework with a second part opinion “within a month or two”.
MORhomes’ advisory group has approved the bond in principle and the aggregator is currently consulting landlords on the compliance principles.
The bond will also align with principles set out in the ESG white paper produced by Peabody, Sovereign, Optivo, Clarion, Centrus and The Good Economy. MORhomes has asked to be considered an early adopter of the white paper.
The ESG white paper, produced in May, is aimed at creating a standardised approach to ESG reporting for housing associations, enabling them to attract private finance for sustainable investment – a market which it estimates is worth £2tn.
Update: at 08:45am, 18/09/20: Story edited to clarify that the bond framework will be adopted within a month or two. The original story said the bond would be launched in this time frame.
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