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SNG secures £400m in first public bond since merger
Sovereign Network Group (SNG) has raised £400m through the bond markets to help with its aim to build 25,000 homes over the next 10 years.
The 33-year bond is the organisation’s first public issuance since it was formed last year through the merger of Sovereign and G15 landlord Network Homes, creating an 83,000-home group.
The bond, secured under SNG’s sustainable finance framework, was priced at gilts plus 108 basis points with an all-in rate of 5.603%.
SNG said the issuance attracted a “very strong” orderbook and was nearly four times oversubscribed, with around 80 investors participating.
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Peter Benz, the group’s chief financial officer, said: “We are very happy with the outcome of this transaction. The strength of interest we received demonstrates the level of investor confidence in our plans and the continuing attraction of the affordable housing sector as a competitive investment destination.”
According to SNG, it is the first long-dated bond in the sector since November 2022.
The landlord is bucking the trend in the sector, having upped its development target in the wake of the merger. The 25,000-home target is around 5,000 more than Sovereign and Network were planning to build individually.
Last November, SNG announced that it had agreed a strategic partnership with house builder The Hill Group, which it said would be “key” for its development ambitions.
However the same month, credit agency Standard & Poor’s (S&P) downgraded its rating on SNG from A+ to A over concerns around its development plans and rising spending on current stock.
S&P warned that as SNG was using debt to fund housebuilding while interest rates remained high, this would weaken its debt metrics. The agency also maintained its ‘negative’ outlook on the landlord.
Earlier this month, Tewkesbury-based landlord Bromford secured two new sustainability-linked revolving credit facilities worth £127m with two UK banks.
The 46,000-home association said it had secured the funding with Lloyds Bank and Barclays despite “growing scepticism over the long-term viability of sustainability-linked loans in our sector”.
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