THFC prices issuance from social housing sector’s largest bond

2021-07-16

The Housing Finance Corporation (THFC) has returned to market with a sale of retained bonds from its £1bn-plus Funding No.3 loan, providing £16m to two smaller housing associations at an effective rate of 2.10%.

The bonds were priced at a spread of 102bps over Gilts, with a steady execution in the face of volatile market conditions caused by higher than expected inflation figures in both the UK and USA.

At 2.10% for 22 years, today’s funding exercise exemplifies THFC’s ability to provide access to competitive finance to housing associations of all sizes. THFC’s Funding No.3 bond, at £1.078bn is the largest in the sector, though in size, was recently matched by the total issuance (across four bonds) of THFC’s subsidiary, bLEND, which now stands at £1.098bn. With over £7.8bn of outstanding issuance THFC group is now the largest mutual lender to the social housing sector.

THFC’s CEO, Piers Williamson, said: “Our Funding No.3 bond has been an important source of funding for associations of all sizes for a decade, consistently delivering highly competitive costs of funds. This ability to provide consistency and equality of access for all our borrowers is a core part of THFC’s model and purpose”.

“In our thirty-four year history we have endured recessions, political uncertainty and a pandemic, so while inflation may present new challenges to the sector, we will still be there to support them in the way only THFC can do.”

Proceeds from today’s transaction will go to two borrowers: Inquilab Housing Association and Merthyr Tydfil Housing Association.

Established in 1986 to tackle housing need among black and minority ethnic (BME) communities, Inquilab now owns over 1,300 homes across West London. As an existing THFC borrower, Inquilab will use the £10m priced today to support their development of new affordable homes.

Merthyr Tydfil owns 1,147 homes with a strong local focus, and today’s transaction marks its introduction to the THFC group. The funds from today’s transaction will be used as part of Merthyr Housing’s growth strategy to increase its provision of affordable homes by almost 200 units by 2025.

Inquilab’s Director of Finance & Resources, Eric Nelson-Addy, said of the deal “today’s pricing represents a great result for Inquilab, allowing us to build up resilience in our business plans. Tackling the chronic shortage of affordable housing requires associations to evolve in a sustainable and impactful way and locking in long-term funding at low rates is a key part of that evolution.”

Samantha Taylor, Director of Corporate Services at Merthyr Tydfil, said “having now became a THFC borrower we look forward to strengthening this relationship as we continue to provide quality affordable homes for Merthyr Housing’s residents. Securing funds at such a great rate allows us to support our ambition to grow and invest in our stock and enhance the services we provide tenants.”

THFC prices issuance from social housing sector’s largest bond

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