Home Group secures £350m bond issue

March 27th, 2019 in Home Group News

Spectrum

Home Group, one of the UK’s largest housing associations, has secured a £350m bond issue to build a wide range of new homes.

The 24-year bond, at an effective fixed rate of 3.24%, is one of the lowest overall rates achieved in recent comparable housing association transactions. 

The bond is structured as £250m to be received from investors now with an option for a further £100m at a future point.

It will support Home Group’s aim to build homes for social and affordable rent, shared ownership, homes in the supported area and for outright sale.

Investor feedback on the deal, which was over oversubscribed two and half times, was extremely positive, with many citing Home Group’s strong management and governance record and geographic diversification.

Mark Henderson, Home Group’s Chief Executive, said: “This is a great deal, and a one that reaffirms Home Group’s strength as an organisation.  

“The deal will go a long way in helping us to achieve our mission to build homes, aspirations and independence. It will also support our target of delivering 10,000 homes by 2022.”

The bond was issued following investor meetings in London & Edinburgh last week. Home Group were supported throughout the process by its bookrunners, HSBC, MUFG and NatWest Markets, and treasury advisers Centrus.

Jonathan Clarke, Managing Director at Centrus, said: “This transaction is the culmination of six months’ work on strategy and long-term funding at this level is a great outcome for Home Group’s management team and customers.”

Ben Broad, Managing Director in Debt Capital Markets at HSBC, said: “This transaction is Home Group’s first since 1987 and the fact that the company managed to achieve the lowest coupon for a new long-dated UK housing association issue since April 2018 reflects the strong demand for low risk social housing and favourable gilt levels as investors continue to seek high quality assets.”

Dominic Brindley, NatWest Markets Head of Public Sector, said: "The NatWest Markets team is delighted to have assisted Home Group in its debut benchmark public bond, achieving the lowest coupon on a long dated HA bond since April 2018. The strength of the order book is continued evidence of investor appetite for social housing credits."

Mark Wells, MUFG Head of Structured Debt Capital Markets said: “MUFG was very pleased to support Home Group as an active bookrunner in its first bond transaction since 1987. The extremely competitive 3.24% yield for a 24-year maturity is testament to the strong management team, diversified portfolio and continued support from the UK investor base for the sector despite the recent increase in Brexit related volatility”