Following a review of their treasury position, Merthyr Tydfil housing association (“MTHA”) embarked on implementing the resultant strategy and this has now been successfully concluded. New finance has been obtained from the capital markets, via bond aggregator THFC, with the proceeds of c.£9m to be utilised to enable restructure of existing bank debt and to support ongoing growth.
MTHA is one of only two housing associations exclusively providing homes in the borough of Merthyr Tydfil and manages c.1,200 homes. Through their local roots and knowledge, MTHA strives to provide tenants and residents with a vital service that is second to none, ensuring the accessibility of high-quality accommodation for all, including elderly, disabled, single and young people.
Centrus was engaged to develop and implement a treasury strategy, aimed at obtaining long term fixed rate debt to underpin the business plan, while at the same time restructuring existing bank funding with 3 lenders to improve the structures, including financial covenants & controls.
We worked with MTHA to identify a strategy to maximise debt capacity to fund future growth, increase financial resilience by increasing interest rate protection and to increase corporate flexibility through improved covenants and controls.
The strategy was successfully delivered, following procurement of the capital markets funding and effective negotiations with all 3 bank lenders, ensuring all objectives were met or exceeded.
- MTHA has significantly increased its financial resilience; reducing interest rate risk, refinancing risk and liquidity risk, as well as obtaining additional funds to help meet growth objectives.
- After engaging with all 3 bond aggregators. MTHA was able to attract an offer from THFC (No.3), representing the most cost effective solution.
- The treasury portfolio has also been improved across key metrics, harmonising covenants across 3 existing bank lenders, increasing the longevity of the portfolio and related interest rate protection, while also creating more funding diversity and reducing counterparty risks.
“Finalising the treasury strategy will allow the Association to deliver on it’s objectives. Securing new funds at such a great rate with THFC and restructuring and simplifying existing treasury arrangements, will allow us to support our ambition to grow, invest in our stock and enhance the services we provide tenants. Centrus advised on the transaction and provided an excellent service throughout.”Samantha Taylor, Director of Corporate Services – MTHA
“MTHA is a great example of very locally focused organisation, delivering much needed housing and support services to the community it serves. Its ability to obtain finance on attractive terms from a range of banks and THFC provides testament to the strengths of MTHA. Successful implementation of the strategy means Merthyr Tydfil has a more robust treasury platform to underpin the long term business plan.”Paul Stevens, Managing Director – Centrus
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