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Aggregator taps sustainability bond to provide £30m for two housing associations
Social housing bond aggregator MORhomes has taken its total loan book to more than £500m with a tap on its new 29-year sustainability bond to lend £30m to two landlords.
Broadland Housing and RBH will borrow around £15m each, through tapping its flagship sustainability bond that launched last November.
The bond aggregator, which is owned by 66 housing associations, reported the yield on the tap was 2.729%, but said the spread of basis points over gilts was not disclosed. It also said that as the tap was placed with an investor, there was not a normal subscription process.
MORhomes launched its sustainability framework in February 2021, which requires borrowers to undergo a “sustainable housing assessment”.
The framework requires a use-of-proceeds arrangement towards affordable housing and “green buildings” and is certified by real estate consultancy Ritterwald.
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Across its bonds, MORhomes has issued 22 loans to 21 different housing associations; its total loan book now stands at £522m
Patrick Symington, chief executive of MORhomes, said: “Borrowers like Broadland and RBH who meet our standards are going above and beyond current requirements and helping meet the government’s zero carbon target and the United Nations’ Sustainable Development Goals.
“We are pleased to be able to demonstrate to investors the excellent sustainability work which they are doing.”
The announcement comes at a time where housing associations are increasingly trying to improve their
environmental, social and governance (ESG) credentials, as well as helping to fund planned investments in decarbonisation works and social housing development.
Just last week, L&Q completed the issuance of a £300m bond that is directly linked to the housing association achieving a number of sustainability-linked targets.
Iain Grieve, executive finance director at Broadland, said the bond provides the landlord with an opportunity to demonstrate its ESG credentials and obtain competitively priced long-term funding that will allow it to develop new affordable homes.
MORhomes has had its credit rating outlook raised to ‘stable’ from ‘negative’ by S&P at the end of last year.
The agency said it expects its borrowers’ creditworthiness will be maintained despite the impact of Brexit and the pandemic.
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