13 landlords access cheap borrowing

The Housing Finance Corporation arranged the government-guaranteed 28-year deal through its subsidiary company Affordable Housing Finance.

It priced at 0.37 per cent over gilts, the cost of government borrowing, which is almost half the previous tightest spread – an own named £150 million bond issued by Sanctuary last October at 0.78 over gilts.

This gave an interest cost of 3.76 per cent and an all-in cost of 3.93 per cent when all costs are taken into account.

The price reflects the Communities and Local Government department’s ‘full faith guarantee’ in backing the bond deal.

The transaction was three times oversubscribed and included a number of new investors for the sector.

One Scottish and two Welsh borrowers participated in the bond. The largest participant was 55,000-home landlord Home Group, which borrowed £20 million, and the smallest was 1,200-home Mount Green, based in Surrey, which borrowed £6 million.

Kris Hopkins, housing minister, said: ‘Today’s bond pricing represents real progress, offering real benefits to affordable housing providers by enabling them to get access to finance on much more favourable terms.’

The deal marks the second use of £3.5 billion in government-backed guarantees following a £500 million loan from the European Investment Bank to AHF.

‘At a time when housing association credit spreads have been drifting higher, this represents a real breakthrough,’ said Piers Williamson, chief executive of THFC.  AHF’s credit spread of 0.37 per cent compares with recent spreads of 1.20 per cent (Radian) and 1.35 per cent (BPHA).