RHP sets new sector record with £175m bond issue at 3.3%

The deal was achieved today (Thursday) at a credit spread of 117 basis points over the reference gilt, which is lower than spreads on recent deals completed by HAs in the debt capital markets.

The issue includes £35m of retained bonds.

Within the first two hours of placing the bond, RHP said it had received offers of over £560m.

The coupon on the bond was 3.25 per cent, with the transaction priced over the UKT 3.5% 2045 gilt.

The stock transfer HA had been assigned an AA rating with a stable outlook by Standard & Poor’s ahead of the issue, putting its credit alongside the likes of L&Q and Notting Hill Housing Group.

The London-based housing provider manages more than 8,000 properties and is formerly known as Richmond Housing Partnership.

Lloyds and Santander acted as bookrunners on the deal. EC Harris are RHP’s treasury advisers, while Trowes and Hamlins are the RP’s legal adviser.

David Done, RHP’s chief executive said: ‘We’re delighted with such a record - breaking deal which reflects our very well-run and financially strong organisation and provides an excellent platform for RHP to achieve even more success in the future.”

Phil Day, RHP’s executive director of finance, added: ‘This is a truly incredible result. RHP’s approach to business has been extremely well received by investors.’

The rate is another record for the sector and follows a string of deals in the last fortnight which have benefited from historically low gilt yields on the back of volatility in the global financial markets.

Scotland’s Wheatley Group sold £50m of retained bonds at an all-in cost of 3.542 per cent and a spread of 140 bps., while Paragon Community HG had raised £250m on the bond market at an all-in cost of 3.626 per cent, and a spread of 140 basis points.

RHP, which was formed through stock transfer from Richmond Council in 2000, is made up of two registered social landlords; parent association RHP, and subsidiary Co-op Homes.

S&P said the RHP rating was supported by the group’s ‘strong financial profile’ - including a very strong liquidity position, low debt levels and high earnings before interest, tax, depreciation, and amortisation (EBITDA).

S&P also said social housing rents are, on average, below 50 per cent of market rates in RHP’s core operating area, adding that long waiting lists mean demand for its rental properties ‘far outstrips supply’.