THFC launches Social Bond Framework

2021-05-07

The Housing Finance Corporation (THFC) has established a Social Bond Framework to help investors recognise the positive social impact that housing association borrowers are delivering.

THFC today published its Social Bond Framework, alongside a Second Party Opinion (SPO) by Vigeo Eiris, with the expectation that the THFC group will issue under the framework primarily through its funding vehicle bLEND Funding Plc.

THFC will also be moving its existing bLEND bonds into the framework. bLEND has so far issued £988 million of bonds since it was established as a THFC subsidiary in 2018, and has this last year signed £565m in new loans at a weighted average cost of funds of under 2.2%.

The new framework is also aligned with the Sustainability Reporting Standard (SRS) for Social Housing, of which THFC is an early adopter.

Given THFC’s history in lending exclusively to housing associations, considered ‘pure players’ whose core business activity is social, the group expects to update markets soon to retrospectively label all of bLEND’s bonds as social and have them included in the London Stock Exchange’s Sustainable Bond Market.

THFC’s CEO Piers Williamson said: “We’re delighted to be publishing this framework, which reflects THFC’s history of social impact while ensuring we’re on the pulse of contemporary trends in impact reporting.

“This kind of reporting is fast becoming market convention, but more than that, it has a vital role in ensuring that the positive impact we and the sector make is heard loud and clear by the investor community.”

Founded as a not-for-profit in 1987 to aid housing associations in accessing capital markets funding, THFC has been issuing bonds with a social purpose for over thirty years.

However, with the evolving focus on environmental, social and governance (ESG) reporting in the financial markets, THFC has opted for a framework to allow its bonds to be specifically labelled as ‘social’, so as to maintain access to a broad pool of investors.

THFC will report annually on its social impact based on certain SRS criteria, which will also make the transition to social impact data collection easier for THFC borrowers.

Vigeo Eiris rated THFC’s contribution to Sustainability as ‘Advanced’, the highest category. The frameworks provisions for use of proceeds, evaluation and selection of eligible loans, and monitoring & reporting were all considered to be consistent with best practice in the market.

The use of bond frameworks to achieve social, green or sustainable labelling is growing in popularity and seen by investors as an important indicator which supports issuers’ purpose and values statements. At the same time such labels provide an invaluable opportunity for issuers to demonstrate their impact and articulate what their organisations stands for.

Piers adds: “Even though THFC has been issuing bonds with a social purpose for over three decades, this framework is about recognising and adopting market conventions in a way that allows us to continue to deliver best value to our borrowers, while communicating our purpose as a sector.”

THFC launches Social Bond Framework

Related Articles

bLEND converts £75m deal to sustainable as it launches new bond framework

S&P affirms THFC’s ‘A’ credit rating and market position as ‘leading aggregator’