Today, THFC Funding no. 3 passed the important £1bn threshold of issuance with its 8th tap issue, five years after it first launched. This is now the second THFC group bond to exceed £1Bn. The Group’s largest bond, issued with a government guarantee by its wholly owned subsidiary, Affordable Housing Finance, was for £1.3Bn.
This latest £83m deal priced at Gilts plus 1.63%, a reoffered cost of 3.447%. The tap transaction was three times subscribed and THFC confirmed that it did not have to pay what is known as a ‘new-issue premium’ to sell the bonds. In an uncertain bond market where credit spreads are increasing and there is known further issuance still to come to market, investors typically require a premium to commit their funds: the ‘new issue premium’.
Despite BREXIT uncertainties there has been a positive market tone for HAs in the short term, allowing Clarion, THFC and potentially both MoR Homes and Notting Hill Genesis to price within a short period of each other.
“The outlook as BREXIT day approaches becomes potentially bi-polar” said Piers Williamson, THFC’s Chief Executive “with hard BREXIT still a possibility, but alternatively the distinct possibility of a protracted political can-kicking session. Delivering long term fixed cost certainty for borrowers makes eminent sense”.
Fenella Edge, THFC’s Group Treasurer added: “Given the uncertainty, the funding market for HAs is in remarkably rude health…a growing number of bank lenders, diversification from US private placement funds and now a new aggregator. However, we are going into a period of significant economic uncertainty and investors realise development exposure and liquidity are the potential Achilles’ heels of the sector. THFC performs a great deal of detailed in-house due diligence on our customers and can therefore draw both sub-sector comparisons and spot issues early on. That’s an important differentiator that investors value”.
According to the 2018 Global Accounts, THFC and its Group companies now lends to c70% of the housing association sector, based on the number of homes owned and/or managed by its borrowers.
Bromsgrove District Housing Trust (BDHT) was one of the new THFC Borrowers in this tap, completing the entire due diligence to pricing process in just over a month.
Mark Robertson, Chief Executive at BDHT said “Following a strategic debate with my Board in December we decided it made perfect sense to advance our funding requirement ahead of BREXIT. THFC and our advisors have worked superbly well with us to fast track our funding requirement for competitive rate certainty and long-term funds and we are really delighted with this outcome”.
If you require any further information, please contact:
Piers Williamson, Chief Executive, The Housing Finance Corporation Limited
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