Herefordshire Housing issues £120m of funding through the capital markets
Herefordshire Housing Limited (HHL) has secured £120m of funding to refinance existing bank loans and raise additional funding to support their growth plans in Herefordshire.
The bonds, which are rated A2 by Moody’s Investor Services, provide £85m on day one and a further £35m retained bonds to sell to investors in the future.
The bonds have a 35 year maturity, amortising over the last 5 years, and are priced at a credit spread of 138bps above the yield on the benchmark gilt.
The bond is listed, and was placed with several investors following a competitive funding process. Asset cover is market standard (105% EUV-SH and 115% MV-T). Interest cover is at a portfolio level based on the charged properties, rather than at a corporate level.
£70m of the funds will be used to refinance restrictive bank loans and break embedded fixes, with the remaining £15m for new development, including regeneration schemes in Hereford.
At only 12 years old, Herefordshire Housing is one of the newest stock transfers to enter the capital markets. Richard Woolley, HHL’s Director of Resources, said: “Our first issuance in the capital markets has enabled us to exit restrictive LSVT style bank loans, and raise funding for additional development that would not have been possible under our old funding arrangements. We are delighted with the outcome and the ability to continue developing and investing in communities in Herefordshire and surrounding areas.”
TradeRisks acted as arranger and dealer on the issue, with Allen & Overy as the capital market lawyers. HHL was supported by Trowers and Hamlins LLP as legal advisors.
Jon Slater, Joint Chief Executive of TradeRisks, said: “A private but competitive funding process, using public listed documentation, has enabled HHL to borrow at attractive levels, particularly given the recent widening of spreads, and to secure a flexible borrowing structure without restrictive bank covenants.”
For further information, please contact Jon Slater on 0207 382 0957 or jonslater@traderisks.com