In two transactions in the course of just over a month THFC has sold £25.5m of retained THFC Funding No.3 bonds for three borrowers.
Despite a month of extreme market volatility caused by the invasion of Ukraine, THFC’s credit spread remained fairly stable, indicating investors’ confidence in the business and the social housing sector more broadly. On 21st February £9.5m was placed at a spread over Gilts of +130bps giving an all-in cost of funds of 2.836%; today a further £16m was sold at G+124.8bps giving an all-in cost of funds of 3.130%.
The £16m will go to Trent & Dove, an existing borrower in the group. Proceeds from February’s trade went to Durham Aged Mineworkers’ Homes Association (£8m) and Soho Housing Association (£1.5m). Trent & Dove also recently took £55m of deferred funding through bLEND as part of a £107m tap at a cost of between 2.97% and 3.07%.
Funding No.3 is the largest public bond in the social housing sector and has seen over £1bn lent to 67 individual housing associations across the UK over the last 11 years. This diversity and high asset cover levels, combined with THFC’s strong ‘A’ credit rating from S&P, make it attractive to investors and underpins THFC’s ability to consistently deliver strong pricing for HAs as evidenced by this quarter’s trades.
THFC Funding No.3 exemplifies the ‘THFC model’ of regularly tapping bonds to grow them in size over time. In bLEND, THFC follows a similar approach, but its MTN programme allows it to issue across a range of series too, to build up a maturity curve. There are £46.5mn of retained Funding No.3 bonds yet to be allocated.
Piers Williamson, THFC’s CEO said: “Today exemplifies the importance of THFC’s role providing reliable and consistent access to capital markets funding, even at a time of severe stress in the financial markets. It’s also a chance to reflect on the success of THFC Funding No.3 as evidenced by the sheer breadth and diversity of its borrowers. At THFC we are fiercely proud of our continued role in widening accessibility of bond funding to fantastic associations like these.”
Durham Aged Mineworkers’ Homes Association is the largest Almshouse Charity in the country, having been established in 1898 to provide housing for workers in the mining industry. Today its c. 1,800 homes across the North East are let to a wider range of residents over 50 years of age, although it continues to emphasise links to the mining industry in its allocations policy. The £8m proceeds from its first loan from THFC group will go to supporting its development of new affordable homes.
Established in the 1970s, Soho Housing Association retains its distinctive focus on affordable homes in one of the country’s most expensive locations for housing. It provides c. 800 homes across the London Boroughs of Camden and Westminster. An existing THFC borrower, the £1.5m raised through today’s loan will go to refinancing its existing THFC (Social Housing Finance) loan which matured in December 2021.
Trent & Dove provide affordable homes across East Staffordshire, South Derbyshire, and North West Leicestershire, with over 6,000 properties. The association has an existing loan through THFC’s Funding No.3 bond.
Paul Mullis, Chief Executive of Durham Aged Mineworkers’ Homes Association, said “working with THFC to put this new funding in place has been a great experience, and we are really excited at the opportunity it provides us to develop many more homes for the older people of the Durham Coalfield over the next few years.”
Soho Housing Association’s Finance Director, Jane Harrison, said “Today’s loan represents a new chapter in our twenty-five year relationship with THFC, and will see new funds invested in improving our existing stock and developing much needed affordable homes for our communities in Camden and Westminster.”
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