S&P affirms credit ratings for MTVH after group restructure

“This change has no impact on our day-to-day operations or the services we provide to residents,” they said.

S&P affirmed its A- long-term issuer credit ratings for MHT and TVHA, with a stable outlook for both.

It said the restructure will “better reflect” the fact that MHT holds most of the group’s housing stock and generates the majority of its turnover.

S&P said it felt MTVH would be “heavily affected by the large investment plan for existing homes, particularly related to fire and safety remediation works needed for its stock” and forecast weak but stable financials.

MTVH’s financial metrics are expected to stabilise in the next two to three years after a “weak fiscal 2024” as a result of a “large non-cash provision for part of the building safety costs”, it said.

“The rest of the costs will be spread over several years, which will hinder improvements in the group’s financial performance,” S&P said, adding that it expects management to handle the costs “prudently”.

The ratings agency also affirmed its A- rating for MHT’s £2bn senior secured and unsecured medium-term notes programme, as well as its £250m senior secured bond.

It affirmed its A- issue rating for a £250m senior secured bond issued by MHT’s wholly owned subsidiary Metropolitan Funding.

The stable outlook means S&P thinks MTVH can “manage risks associated with its large investment programme in existing stock through successful grant negotiations and cost management, while maintaining a contained development programme”.

S&P said it could lower the rating if investment in existing stock increased beyond its expectations or if MTVH develops more homes using debt funding.

It could raise the rating if MTVH achieves “substantially better credit metrics” than S&P currently predicts, on a sustained basis.

In October, Fitch Ratings downgraded the 57,000-home association over its “worsening financial leverage metrics”.

In its accounts for 2023-24, the association reported a deficit of £80m due to fire safety provisions and the write-down of decommissioned high-rise blocks.