Home Group, one of the UK’s largest housing associations, has successfully sold in May 2020 £100m retained bonds in a deal which saw the lowest interest rate that the Group has ever achieved in a long-term fixed rate transaction. This funding forms a key part of the Group’s long-term financing strategy and will further support Home Group’s aim to build homes for social and affordable rent, together with supported housing.
Centrus provided treasury advice to Home Group, including advice on the initial £350m bond issue, over the course of 18 months. Centrus worked with Home Group to analyse cashflow forecast and identify the most favourable financing source. This involved carefully monitoring market conditions, reviewing potential funding options (including a forward sale of the retained bonds, bilateral placement with specific investors or a typical syndicated process) and identifying a window of opportunity. The 23-year bond, at an effective fixed rate of 2.311%, is one of the lowest overall rates achieved in recent comparable housing association transactions and the lowest in the Group’s history.
“This is a really great deal and we are delighted. Not only does this reaffirm Home Group’s strength as an organisation but it’s very good to know that investors see us as a safe and secure investment at times of wider uncertainty.”John Hudson, Chief Financial Officer – Home Group
“This is the second capital markets transaction since the start of 2019 where Centrus have advised Home Group, after they advised also on the bridge-to-bond bank facilities in late 2018. We very much value the advice, guidance and constructive challenge provided by Jon, Lawrence and the wider Centrus team as we seek effective financing solutions to support our strategic goals.”Steve Hallowell, Director of Treasury & IR – HomeGroup
“This successful transaction is a good example of effective decision making and governance in a fast-moving environment; we believe that it supports Home Group’s financial resilience and capacity.”Jonathan Clarke, Managing Director – Centrus