Wheatley sells £50m retained bonds at 'record-low rate' of 3.542%

The transaction follows Wheatley’s debut £300m own name public bond issue in November 2014 - a first for the Scottish social housing sector - when it raised £250m on the day, with £50m retained for later sale.

That initial deal was done at 160 bps over the gilt and an all-in cost of 4.42 per cent.

The £50m transaction, which priced last week, achieved a spread of 140 basis points over the reference gilt. Bookrunners on the deal were Lloyds and RBS.

Wheatley has also completed a new £50m commercial finance arrangement with the group’s existing funders to support the development of private rented homes, first revealed by Social Housing magazine.

That will enable its commercial subsidiary, Lowther Homes, to grow its current portfolio of almost 500 homes from Glasgow’s West End to Leith over the next four years.

Wheatley, the parent organisation of Scotland’s largest registered social landlord, Glasgow Housing Association, was rated AA- by Standard and Poor’s in 2014.

Its initial bond priced at a coupon of 4.375 per cent, priced over the 4.5% Dec-2042 reference gilt. Security was charged at 105% EUV or 115% MV-ST.

Wheatley Group chair Alastair Dempster said the latest deal is ‘another massive vote of confidence in Wheatley Housing Group and Scotland’.

He said: ‘The record low coupon achieved today represents outstanding value and will enable us to press ahead with our plans to play a major part in delivering more affordable housing.’

Group chief executive Martin Armstrong said Wheatley was delivering one of the largest housing development programmes in Scotland in recent years.

He said: ‘Market conditions, combined with strong confidence in Wheatley by institutional investors, created the perfect opportunity for us to issue the £50m retained last year.

‘The additional funding will allow us to press ahead with our plans to supply almost 3,000 new affordable homes in Glasgow and across central Scotland and continue to deliver excellent services.’

Wheatley, which operates across 12 local authority areas in Scotland and owns and manages 72,000 homes, is Scotland’s largest housing, care and property-management organisation.

Two retained bond sales in England in October 2014 saw tighter spreads but higher all-in costs.

They included Great Places Housing Group, which sold £18m of retained bonds at 102 bps over the reference gilt and all-in cost of 4.002 per cent.

Peabody sold £100m of retained bonds at a spread of 115 bps over the gilt and all-in cost of 4.026 per cent.