Onward Homes completes group restructure and achieves record breaking spread on debut bond issuance

Transaction Overview

Onward is a leading provider of affordable housing to rent and own, with over 35,000 homes owned or managed across the North West.

Formed in 2018 from the merger of five housing associations, Contour Homes, Liverpool Housing Trust, Hyndburn Homes, Peak Valley Housing Association and Ribble Valley Homes, Onward has until now retained Contour Homes as a separate entity.

The now complete amalgamation of Contour is the culmination of the group’s ambition to create a single, streamlined and operationally efficient structure and has been supported by Onward’s debut bond launch on 18th March. The £350m bond, of which £135m has been retained, was used to fully refinance three legacy funders whilst also providing capital to support Onward’s aim to deliver 500 new homes per annum.

Centrus Solution

Centrus has worked closely with Onward to deliver this complex transaction, from strategy and business case development, through Onward’s initial credit rating process with Moody’s and bond issue, to completion mechanics across multiple bank lenders.

The transaction has seen Onward achieve an A1 (stable) credit rating with Moody’s, launch a debut bond that achieved a record setting spread of 88bps for a 32-year tenor, and refinance three banks with associated break costs of c. £40m.

The outcome is a streamlined, unified organisation with significant financial strength to deliver real social, environmental, and economic impact across the North West.

Centrus provided broad corporate finance advice to Onward, whilst Devonshire’s provided the legal advice across financing, governance, and security aspects of the transaction.

“Our successful bond issue is the completion of a five-year process to create a single organisation from five separate housing associations. We are now realising the financial strength of our united organisation. The investment raised will underpin our business plan for the years ahead, to deliver considerable social, environmental and economic impact in the North West.”

Bronwen Rapley, Chief Executive – Onward

“We have worked with Onward over a number of years to realise the ambition of a strong, simplified group structure and robust risk averse funding structure. What began in 2018 has now been completed, whilst leveraging management’s acknowledged strength and sector leading financial credentials to gain an A1 rating with Moody’s to achieve a record low spread on a debut bond. The new funding structure really sets Onward up to deliver in the future. Refinancing risk has been proactively reduced, the fixed floating ratio has been significantly enhanced, liquidity has been bolstered, and treasury operations simplified.”

John Tattersall, Senior Director – Centrus

“Centrus led the development and delivery of Onward’s treasury strategy, culminating in our first bond issue. John Tattersall and his colleagues gave an excellent and wide-ranging service. While you would expect strong technical knowledge and support, Centrus’ strengths are also visible in other key areas. Perhaps most importantly, they provided excellent assurance to the Board and Treasury Committee, engaging them with the benefits and risks of the planned approach and making clear and concise recommendations via well-written reports and presentations.

Centrus has really delivered for Onward.”

Mike Gerrard, Executive Director of Finance – Onward

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