You are viewing 1 of your 1 free articles
Jigsaw maintains A2 rating with Moody’s as outlook turns stable
Moody’s has upheld Jigsaw’s A2 credit rating and upgraded its outlooks from negative to stable.
The credit rating agency said the landlord, which owns 35,000 homes across the North West of England, will spend less than planned on development, meaning its debt will grow at a slower pace than originally envisioned.
Both Jigsaw Homes’ long-term issuer rating and Jigsaw Funding’s senior secured debt rating became A2 stable, while the landlord’s baseline credit assessment was also affirmed at A3.
Moody’s added that it expected Jigsaw’s operating performance to strengthen in comparison with its 2022-23 results, due to additional rental income.
READ MORE
Its report forecast Jigsaw’s operating margin to average 27% over the next three years, up from 21% in 2022-23.
Jigsaw’s gearing is likely to remain in line with the A2-rated peer median, at 49%, over the financial years 2024-26, Moody’s said.
The housing association’s capital spending was lower than planned, as it “outperformed its prudent forecast”, the report added.
Jigsaw plans to build 4,000 homes by 2025-26 and is on track to complete half of those by the end of the 2023-24 financial year. It also benefited from higher grants and cash receipts than planned in 2023-24, limiting debt growth.
Moody’s praised Jigsaw for its “risk-averse financial management” and its strong focus on social housing lettings, which create stable cash flows and benefit from high demand.
Jigsaw has limited exposure to market sales, as it only develops shared ownership units.
It also has strong liquidity, the agency said, which increased after its December 2023 debt refinancing. Based on its current levels of liquidity, Jigsaw will not need to borrow again until March 2027.
Moody’s did warn, however, that a downgrade could result from “a ramp-up in capital spending” after 2023-24 that would lead to an increase in debt or a “significant scaling up in market sales exposure”.
A weakening of the regulatory framework or dilution of the overall level of support from the UK government could also lead to downward pressure on its ratings.
In an interview with Inside Housing in January, Brian Moran, Jigsaw’s new chief executive, said: “We keep things simple. We don’t do daft things… We’re not going to start diversifying into areas outside our core areas of competence.”
It comes after GreenSquareAccord was downgraded from an A3 to a Baa1 yesterday, and Clarion maintained its A3 credit rating last month.
