MORhomes PLC, the new funding agency owned by 62 housing associations, has issued its inaugural £250m benchmark bond issue – funding 19-year loans to nine registered provider groups in England and Wales.
The bond is being launched via MORhomes’ sterling Social Bond Programme, with the price fixed at 98.95, to give a yield on the bonds of 3.476%.
Borrowers include A2Dominion, Aster, EMH Group, Hendre, Local Space, Melin Homes, MHS Homes (through its registered provider Heart of Medway), Pobl and South Yorkshire Housing Association.
Bonds carry a 3.4% coupon paid semi-annually and have a redemption date of 19th February 2038.
MORhomes is an initiative created by the Housing Association sector, for the Housing Association sector, with borrowers who are also shareholders.
Additional benefits include:
- Flexibility to borrow in amounts from £10m upwards – saving the cost of having to borrow larger amounts which might be more than is needed at any one time
- Quick access to the market, reducing uncertainty over the price of funds
- Flexibility on types of security offered and efficient use of security
- Simple documentation and reduced costs and resources in going to the market
- No onerous corporate financial covenants
- Transparent predictable credit process and annual credit limit
Neil Hadden, Chair of MORhomes, said: “After two years’ hard work by MORhomes, its advisers and its inaugural group of borrowers, I am thrilled to see this project come to fruition – it shows that the sector continues to innovate in finding new ways to access the funding to support the development of new homes.”
In a joint statement, the borrowers said these benefits have a “real impact” on the overall cost of financing – over and above the headline rate – and the resources required to raise funds.
“We are proud to be supporting MORhomes’ first issue and look forward to working alongside shareholder colleagues to ensure that MOR Homes continues to raise finance for the sector.”
S&P has rated MORhomes and its programme to an A- rating with a positive outlook, highlighting a strong financial profile and structure which mitigates credit risk.
S&P considers the rating could be upgraded within two years if the Company meets its business plan.
The Programme also benefits from a second party opinion from Sustainalytics on its compliance with Social Bond principals.