Sovereign Housing Association has entered into a three-year £250m unsecured revolving credit facility, syndicated across five lenders.
The deal is pitched as providing Sovereign with financial security through a potentially uncertain political and economic period.
It will also provide the flexibility and liquidity to allow Sovereign to consider the best time to approach the debt capital markets to raise long-term funding to support its ambitious development programme – taking control through more land-led developments and building 1,900 new homes a year.
The lenders, led by NatWest, include Lloyds Bank, MUFG, National Australia Bank and SMBC.
This is Sovereign’s first unsecured borrowing and one of the first major unsecured bank facilities in the sector.
“We have an ambitious strategy, to take control and build more affordable homes, to invest more in our existing properties and communities, and to become leaders in customer service.
“To achieve this we need the fast and flexible access to finance offered by this new deal in order to keep building much-needed affordable homes through potentially uncertain times ahead,” said Barry Nethercott, Sovereign’s Chief Financial Officer.
The deal was arranged by Centrus, who negotiated on Sovereign’s behalf.
With legal support from Winckworth Sherwood, the deal was arranged by Centrus, who negotiated on Sovereign’s behalf.
Centrus MD Phil Jenkins said: “We were very pleased to work with Sovereign to deliver this exciting and innovative transaction which delivers large scale, unsecured bank facilities on competitive terms.
“The facility includes a new lender as Sovereign continues to widen its banking group on attractive terms and provides flexibility and a strong platform from which to approach the debt capital markets.”
Sovereign’s approach has been to secure a diverse range of funding to provide the necessary investment funds and maintain appropriate liquidity.
This includes a mix of bond and bank finance, including a £150m loan facility with the European Investment Bank (EIB).
At 31 March 2019, Sovereign’s undrawn loans totalled £370m, so the unsecured facility has added considerably to its liquidity headroom.
Sovereign’s financial strength and stability is recognised through its excellent ratings from credit rating agencies including an A2 from Moody’s and an A+ from Standard & Poor’s.