GreenSquareAccord secures £400m sustainability bond

GSA said the bond, issued on 30 November, was launched at an initial guide price of 235 basis points over gilts, but demand helped to drive this down to 210 basis points.

Covenants on the bond included asset cover of 1.05x EUV, or 1.15x MV-ST.

GSA has credit ratings of A3 from Moody’s and A from Fitch Ratings.

James Tarrant, director of corporate finance and treasury at GSA, said: “Given the volatility leading into the transaction and lack of recent sterling issuance, the significant demand from investors in purchasing this bond aligned to our new sustainable finance framework was really positive to see.”

Jo Makinson, chief finance officer at the association, said: “This bond gives us long-term assurance and certainty of cost in an increasingly volatile and unpredictable market.

“We are delighted to be able to secure funding that will enable us to continue to deliver for our customers and communities.”

The deal was arranged by Barclays, which advised on sustainability structuring, as well as Lloyds and Mitsubishi UFJ Financial Group, both of which advised on ratings and helped with marketing.

NatWest also arranged the deal; it worked on documentation, billing and delivery. DNV was used for a further opinion.

Centrus was GSA’s funding advisor, Devonshires was the legal advisor for funding, and Trowers & Hamlins advised on security.

Trowers & Hamlins said that it had uplifted the security value of GSA’s stock by £420m. It said this was done by varying Section 106 agreements, varying other development documentation and uplifting the value of stock acquired from local authorities.

The law firm said these uplifts mean GSA was able to achieve market value – subject to tenancies valuation (MV-T) for at least 97 per cent of all rented homes charged, excluding supported or sheltered housing.

Forhad Ahmed, an associate in the real estate finance team at Trowers & Hamlins, said: “The scale of the value uplift achieved shows just how effectively housing associations can increase property values in an economic downturn by undertaking a rolling charge and value uplift programme.”

Savills provided funders’ valuation and Addleshaw Goddard was the legal advisor.

M&G was the security trustee, while BoNY was the paying agent, and BDO provided audit services.

In June last year after its merger, GSA secured £75m in funding through aggregator Blend to fund its plans to develop 1,000 new homes a year.