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Housing association agrees £75m loan with rate dependent on gender pay gap targets
A Midlands housing association has secured a governance-linked £75m loan deal which will see it pay lower interest rates if it manages to reduce its gender pay gap.
Bromford said the five-year revolving credit facility (RCF) with Sumitomo Mitsui Banking Corporation is the first in the sector to be linked to the governance metric within the environmental, governance and sustainability (ESG) agenda.
If the 44,000-home landlord meets its agreed key performance indicator to continuously improve its gender pay gap from the existing median group level of 7.1%, it will benefit from a lower interest rate margin, with savings re-invested into community projects to support customers.
The deal marks Bromford’s second sustainability-linked loan of the year and represents its first transaction with an organisation from the Far East.
It follows the release of the Sustainability Reporting Standard for Social Housing, published last month, which aims to create a uniform reporting standard on ESG to harness private capital.
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Imran Mubeen, head of treasury at Bromford, said: “This new facility brings in a fourth provider of RCF into our loan book, which strengthens our liquidity, mitigates our counter-party risk and increases our access to funds from a diverse range of sources as we continue to deliver over 1,000 new homes a year.
“We are seeing more interest from overseas funders and investors, and we will continue to work proactively to present the many strengths of the social housing sector and Bromford story to new lenders.
“We hope to see a rebasing of price among some of the UK banks which have been pricing wider than expected for our credit profile.”
Fiona Regan, chief people officer at Bromford, said: “We perform well on our gender pay gap at Bromford, but it is important that we continue to strive for improvement.
“This deal has provided renewed focus to this important agenda, and ongoing reporting will ensure that new initiatives and measures continue to be delivered as we create a workplace which supports all of our colleagues to succeed.”
Bromford said it is also developing its ESG framework, which it claimed will be the first in the sector to be accredited by credit ratings agency Standard & Poor’s and will be published by March 2021.
Legal advice on the deal was provided by Trowers & Hamlins and Addleshaw Goddard.
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