Building upon an A1 rating from credit rating agency Moody’s Investor Services, Southern Housing Group has successfully secured its funding requirements for the foreseeable future with its first own name bond issue.
The bond has facilities in place worth up to £175 million over the next five years, available in tranched payments, minimising the cost of carry to the Group while ensuring funds are available when they are needed.
The Group has issued a £125 million listed bond, with £75 million drawn now and with an option via a retained bond to draw a further £50 million at any time in the next five years.
The bond was issued at a rate of 4.5 per cent and matures in February 2039. In addition, the Group has issued a five-year forward start bond maturing in 2044, guaranteeing a £50 million drawdown in five years’ time at rates set now. This price certainty is a feature that has rarely been seen on bond issues in the sector to date.
Group Finance Director, Rosemary Farrar said the money raised would ensure availability of funds for the Group's business plan and development agenda.
“We have a strong business so we have been able to take advantage of favourable market conditions in order to raise this relatively small bond issue. It will allow us to move forward with funding in place to deliver our 30 year business plan with greater operational flexibility.
"It will also allow us to continue with the diversification of our product range as set out in our new Corporate Strategy.
We are focusing on providing a range of housing options for our residents no matter what stage of their life they have reached.” The pricing of the Group’s relatively modest issue reflects the stability and strong performance of the business which has reported a surplus of £38.8 million in 2012/13, up from £17.9 million the previous year.
Tom Dacey, Group Chief Executive said, "With the very limited government grant now available to housing associations the money raised by this bond issue will allow us to continue operating successfully and re-investing back into our business for the benefit of our residents.