THFC deliver a competitively priced bond tap for its Funding No.3 vehicle!
Over the last few weeks the sterling market has witnessed some volatility, alongside a steady flow of both public bond issuances, and private placements. The first transactions of 2018 saw L&Q raising £500m in two tranches and more recently Optivo issuing a £250m bond at a coupon of 3.283%.
Credit spreads in the sector have widened in recent months. Investors cite a perceived increase in risk in the sector (evidenced by rating downgrades), and an expectation of a significant increase in supply of issuance, from the social housing sector, as the drivers for this.
As a regular issuer in the market, THFC was pleased to issue a £60.5m tap transaction of THFC Funding No.3, delivering pricing and asset efficiency competitive to own name bond issues, for four borrowers:
Wales & West Housing Association
Trent & Dove Housing
Hexagon Housing Association and
United Welsh Housing Association
This latest tap achieved a credit spread of 143bps over the GILT. This led to an all-in cost of funds of 3.344% and an effective asset cover of 120% and brings the total value of the bond to just over £900m.
“Housing associations are increasingly dependent upon capital markets as banks shy away from long term deals. This surge in HA activity, as shown recently, can widen overall credit spreads. However, THFC has weathered these conditions to deliver a respectable pricing, on a large bond.
This will help recognise the sectors collective goal to deliver competitively priced long-term funding, to support the Borrowers’ business plans and the delivery of more affordable homes across the country.”
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