HAs retain credit ratings but outlooks challenged by wider economic situation

Bromford 

Bromford retained its A2 rating with Moody’s and its A+ rating with S&P, but also kept its negative outlook from both credit ratings agencies. 

Moody’s said that the 44,000-home landlord’s credit profile reflects its “strong financial performance and liquidity, as well as its large development programme”.

S&P said in its report: “Prudent cost management, an expanding asset base, and a contained debt build-up will partly help Bromford navigate times of rising inflation, the high investment needs in existing assets, and tightened funding conditions.”

It added: “Lower funding needs, favourable cost of debt, and strong performance of its underlying social housing portfolio will support the group’s relatively solid interest coverage.”

S&P said its negative outlook for Bromford “reflects the outlook on the UK”.

EMH Group

EMH Group retained its long-term issuer credit rating at A+ as well as its negative outlook from S&P. 

The agency said that EMH’s financial performance will come under pressure because of high investments in existing stock and inflationary impact on its cost base.

It said it expects the group’s management to moderately scale back its development programme and reassess its zero-carbon investments over the next three years.

S&P said in its report: “The ratings reflect our view that EMH’s focus on traditional social housing activities and contained development will help stabilise its financial and debt metrics.

“However, the group’s increased investment needs in existing stock and inflationary pressures could entail higher-than-anticipated costs. This will tighten the group’s financial position and weaken non-sales EBITDA interest coverage over the next three years.”

Hightown Housing Association 

Moody’s gave Hightown Housing Association a rating of A3 with a negative outlook.

The credit ratings agency said the rating reflects the provider’s strong focus on social housing and care and supported housing activities, both of which have a “stable demand profile and relatively predictable revenue streams”.

Moody’s said the rating also reflects Hightown’s stable operating margins and simple governance structure. However, it said its negative outlook reflects the “high exposure to weaker economic and financial conditions in the UK”.

Moody’s added: “A seven per cent ceiling on social rent increases in England combined with high cost inflation will constrain operating margins over the next 12 to 18 months.”

The Guinness Partnership

Earlier this month S&P also affirmed its A- long-term issuer credit rating on 66,000-home The Guinness Partnership, while it kept its ‘stable’ outlook.

The agency said it expects Guinness’ capital expenditure to increase as it ramps up the delivery of new homes over the next three years, resulting in higher debt levels.

But it added that “solid earnings from the group’s steadily growing asset base and secured grants from the Building Safety Fund will mitigate the effect of higher spend on its existing homes”. 

The credit ratings agency said the stable outlook reflects its view that Guinness’ adjusted EBITDA margins will recover to close to 20 per cent, along with a gradual strengthening of its adjusted EBITDA interest coverage, to fiscal 2025.

It also affirmed The Guinness Partnership’s A- long-term issue rating on the housing association’s senior secured debt of £400m due 2055, £250m due 2044, and £100m due 2037.

Plymouth Community Homes 

S&P also affirmed its A+ long-term issuer credit rating for 16,100-home Plymouth Community Homes (PCH) with a stable outlook.

The ratings agency said: “The stable outlook reflects our view that PCH will maintain a focus on social and affordable rental homes, supporting solid operational performance metrics.

“The outlook also reflects our forecast that PCH’s strong debt metrics and excellent liquidity position will continue to offset its relatively weak financial performance.”