THFC has one of its strongest ever years as loan book nears £7.9bn
The Housing Finance Corporation (THFC) has reported one of its strongest years for funding transactions in its 34-year history.
Cementing its position as the UK social housing sector’s market-leading bond aggregator and leading mutual lender, THFC and its subsidiary bLEND have executed more than £600m of cost-efficient bond transactions in the 12 months to 31 March 2021, supporting housing associations of different sizes and footprints across the UK.
The volume of deals reflects the UK social housing sector’s ongoing commitment to investing in homes and services during the global pandemic, and its clear requirement for extensive private finance both now and into the future.
Posting financial results for the 12 months to 31 March 2021, THFC has also revealed a pretax surplus of £7.2m, up from £3.4m in 2020. As a not-for-profit organisation, this surplus is reinvested in the group’s core activities of sourcing funding from a range of institutional investors to deliver cost-efficient, responsible funding for housing providers.
THFC was set up in 1987 in partnership with the National Housing Federation and what was the Housing Corporation, to facilitate and promote private investment in the UK social housing sector. The social housing private finance market has since grown to around £120bn, making it by far the most successful partnership between public sector and private finance in the UK.
Thirty-four years after its creation, 2020/21 has seen a number of firsts for THFC, including the launch of a Social Bond Framework and conversion of £1bn of bLEND bonds to social bonds, marking the mainstreaming of the environmental, social and governance (ESG) agenda in UK social housing.
Other innovations in the year included the introduction of deferred drawdowns on bLEND
transactions.
Much of the growth in THFC’s size and performance has been driven by bLEND, set up in 2018 to offer more flexibility and quicker access to the funding market through an MTN platform.
bLEND trebled its number of borrowers from five to 15 in the 2020/21 year, six of which were new to THFC group. By August 2021, bLEND borrowers stood at 21.
bLEND saw £565m of issuance at a weighted average interest rate (including deferral premia) of 2.19%, with the majority of this in the 2054 maturity bond. Its year-end loan book, including priced-not-drawn loans, stood at £955m. That figure has since increased further post-year-end, to £1,098m.
Piers Williamson, chief executive at THFC, said: “THFC’s success over the last year is not only extremely good news for our business, but points to a few truths about the state of our sector. Housing associations have proved resilient and throughout the pandemic continued to come to the capital markets for funding. The demand for bLEND demonstrates the importance of flexible and easy access to long-term, low-cost funding for associations as they grapple with the challenges of decarbonisation, fire safety and the need for new truly affordable homes.
“On a personal note, having being CEO of THFC for nearly two decades, I’m thrilled to see the group go from strength to strength, continuing to support the social housing sector.”
THFC’s £605m of bond transactions in 2020/21 also brings loan book growth to 40 per cent in five years, while group revenue has risen by more than 20 per cent to more than £12.4m in the same period.
Group reserves have increased by 60 per cent since 2015/16. In the 2020/21 year, they rose 11.6%, from £41.7m to £46.6m.
THFC’s Chair, George Blunden, said: “These results are excellent and put THFC on a strong footing as we look to the future. Given the challenges the sector faces, THFC continues to innovate and develop new products which will support housing associations in their decarbonisation strategies. Long-term and cost-effective funding will be absolutely vital in the realisation of the net zero carbon agenda to which THFC is firmly committed.”
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