ARA Venn launches new £100m bond series

News13 May 2022James Twomey

Real estate investment firm ARA Venn has launched a new bond series of £100m through the government’s £3bn Affordable Homes Guarantee Scheme (AHGS).

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Real estate investor ARA Venn has launched a new bond series of £100m through the government’s £3bn Affordable Homes Guarantee Scheme #SocialHousingFinance #UKhousing

The bond was issued at gilts plus 63 basis points (bps), with a coupon of 2.711 per cent.

Of the bonds issued, £55m will be on-lent immediately, and the firm said that the remainder will be retained to fund other successful loan applications currently being processed.

The AHGS aims to provide £3bn of loans to private registered providers, and according to ARA Venn, the affordable housing sector has shown a strong interest in loans from the scheme. The scheme’s portfolio manager previously told Social Housing that this was likely to include for-profit providers in “future phases of delivery”.

ARA Venn manages the scheme on behalf of the government and raised the finance through its subsidiary Saltaire Finance, which it set up to act as the funding vehicle for the AHGS.

The firm made its debut issuance for the scheme in November, with a 30-year, £350m bond priced at just 38bps over gilts.

Steve Bullock, assistant director, Housing Guarantees at Homes England, said: “The capital markets have been particularly volatile in recent weeks, so we are delighted to have successfully launched the second series of AHGS bonds to support Nottingham Community Housing Association’s continued investment in the development of new affordable homes.”

The bonds carry the UK government’s credit rating, and the cost of borrowing on the bond is passed on directly to borrowers.

ARA Venn confirmed that Saltaire Finance intends to continue issuing bonds regularly through the Euro Medium-Term Note programme it established for the scheme.

The AHGS is open to new applications until April 2024, but funding can occur after that date.

Oriane Auzanneau, deputy portfolio manager for the AHGS and director at ARA Venn, said: “We are delighted to be able to support Nottingham Community Housing Association’s affordable housing development programme with a loan which will support the development of over 450 much-needed affordable homes in the local communities it serves.

“The successful completion of the bond at a competitive price in a volatile and generally challenging market backdrop shows the strength of the government-guaranteed programme, allowing borrowers to secure lower cost of funds for the long run.”