Clarion breaks bond pricing record with second sustainability bond

The UK’s largest housing association priced the 12-year bond at 95 basis points (bps) over gilts, giving a semi-annual yield of 1.341 per cent and an all-time low coupon of 1.25 per cent.

Around 60 investors took part in the issue, with a total order book of £850m. Funds raised will be used to develop energy-efficient housing under Clarion’s Sustainable Housing Finance Framework.

The bond is the group’s second issue using this framework, which makes use of its accreditation under the pan-European Certified Sustainable Housing Label, which it received in November 2019. In January, the first issuance was for £350m at a margin of 98 bps over gilts and an all-in rate of 1.88 per cent, having received £1.3bn of orders.

Both bonds were issued as part of Clarion’s £3bn Euro Medium-Term Note programme. In total, the group has issued £2.4bn of bonds.

Gareth Francis, director of treasury and corporate finance at the 125,000-home association, said the decision to go to the market again was partly driven by the opportunity to access low spreads.

“It’s a mixture of funding requirement and market opportunity,” he told Social Housing. “If you see there is a good opportunity you want to pull ahead your plans.”