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Midlands housing association gets boost to credit rating
A Midlands-based housing association has seen its credit rating rise to A2, one of the highest in the sector.
Ratings agency Moody’s issued the fresh judgement saying that WM Housing’s recently completed refinancing meant that its credit position had improved.
The 30,000-home association’s rating moved up from A3 to A2, a rating which is among the highest in the agency’s portfolio of housing associations.
WM Housing was also given a stable outlook, meaning the agency does not think the rating is likely to change in future.
Moody’s said: “Over the past two years, WM Housing has consolidated its governance structure, moving to a co-terminous board which has streamlined reporting and oversight.
“In 2017, the housing association issued a £280m bond and conducted a debt refinancing exercise, which, while incurring significant breakage costs, greatly simplified the group’s debt profile and covenant management.”
WM Housing issued the bond in October last year, increasing its debt to assets at cost to 49% and its debt to revenue to 4.2.
Its refinancing, however, gave it lower and more stable interest costs, meaning its interest cover will improve, Moody’s said.
The agency added that its rating takes into account the association’s credit challenges, such as risks from its expanding sales programme.
WM Housing plans to build 500 homes a year over the next five years, half of which is intended for social rent, 30% for shared ownership and 18% for market sale.
Stuart Kellas, chief financial officer at WM Housing, said: “The upgrade to our credit rating by Moody’s is very positive news for our organisation and reflects the work we have been doing over the past 18 months to streamline our governance and finances.
“The new rating will provide us with a solid base from which we can invest in our homes and services and meet our increased target to build 500 new homes a year.”
