Blend issues first social bond at lowest ever margin

News17 May 2021Sarah Williams

Blend Funding, the subsidiary vehicle of The Housing Finance Corporation (THFC), has completed its first issuance since launching a social bond framework earlier this month, achieving its lowest credit spread to date.

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Blend Funding, the subsidiary vehicle of The Housing Finance Corporation, has completed its first issuance since launching a social bond framework earlier this month, achieving its lowest credit spread to date #UKhousing #SocialHousingFinance

Social Housing reported in early May that the funder had launched the framework, alongside plans to convert the nearly £1bn (£988m) of Blend’s existing issuance to ‘social’ bonds – a process it has now completed.

Now, in a £35m tap of Blend’s 2054 maturity, the company has made its first new ‘social’ issuance, achieving a spread over gilts of 108 basis points – the lowest to date for the subsidiary. This produced an all-in rate of 2.45 per cent, despite what the firm referred to as “choppy market conditions after [last] week’s CPI announcements from the USA”.

Blend priced an initial £25m on Friday (14 May) for housing association borrower Valleys to Coast, with the remaining £10m intended to be priced on a deferred basis.

Claire Marshall, corporate director of finance, governance, strategy and performance at Valleys to Coast, said: “Securing this low-cost, long-term funding through Blend will help us to meet our ambitious 10-year corporate plan objectives and to maximise our investment in our homes and communities.”

Piers Williamson, chief executive of Blend and THFC, said: “We’ve now converted all Blend bonds into social bonds, reinforcing the focus on social impact, which sits at the heart of Blend.

“It’s great to see the positive response from the sector, but too the knock-on effect on pricing, which enables us to secure a great rate for associations like Valleys to Coast, who do such important work for their communities.”

The deal is the latest ESG-related deal in the capital markets for housing association borrowers, after Paradigm housing issued its debut ‘sustainability’ bond last week, joining just four other HAs known to have done so to date.

And news of the sector’s first known private placement to apply a ‘green’ use of proceeds has also emerged in the last week, in a £120m deal for Origin Housing.

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