LiveWest issues bond at 2.346% through new £1bn European Medium-Term Note programme

In September, credit ratings agency Moody’s rated the EMTN programme A2 (stable), matching its credit opinion of LiveWest issued in June, which cited “stable operating performance, ample interest coverage, [and] moderate debt metrics compared to peers”.

The issuance followed three days of roadshows in London and Edinburgh, with 24 out of 27 investors choosing to participate, Mr Garrett revealed. All are UK based.

Lloyds, Santander and Japanese bank MUFG were bookrunners on the deal.

Mr Garrett said: “I think it reflected our strong A2-rated Moody’s rating that the bond also has, and the demand was very strong at the end. The book closed with demand of £750m.”

Alongside providing liquidity, the new funding will support development, as well as being used to restructure around £100m of legacy loans, Mr Garrett said.

LiveWest has set out ambitions to build 7,000 homes over the next five years. Around 1,350 are expected to be delivered this year, he said, of which 1,200 would be affordable.

Post-merger position

The bond was issued from the group’s treasury vehicle LiveWest Treasury. It follows the £50m retained bond issued through LiveWest Capital last year, relating to the £100m bond initially issued by legacy organisation Knightstone in 2013.

In its first full financial year since its merger, LiveWest reported pre-tax surplus of £56m for 2018/19, up from £45m in 2017/18. Its annual accounts cited “a successful start to merger integration cost efficiencies”.

Mr Garrett said that the combined organisations had always planned to access the capital markets following merger, but that the decision to launch an EMTN programme was more recent.

He added that the programme was brought in to provide “flexibility around the sort of timing, amount and maturity going forward”.

The provider will likely go out for the retained £50m next summer, he said, adding: “I think our main financing will come from the EMTN programme going forward and we will continue to work with our bank partners for liquidity – [through] revolving facilities.”

He added: “It was a good time to go [out to the market] pre the political uncertainty at the end of October.”

EMTN programmes

LiveWest is just one of four housing associations with its own EMTN offering. A2Dominion, Clarion and Places for People each have programmes, currently standing at £1bn, £3bn, and £2bn respectively. Both Places for People and A2Dominion have unsecured platforms.

Mr Garrett said that size was the primary barrier to more housing associations adopting the model, adding: “It is something that we believe is a good product and certainly it’s worth others looking at.”

The EMTN documents say that LiveWest has “substantial assets it can utilise as security for drawdowns under the programme”. The group’s unencumbered assets are expected to remain in excess of £650m following security allocated to the initial issuance.

LiveWest received legal advice on the bond from Trowers & Hamlins, with Addleshaw Goddard acting on the funders’ side. Funders’ valuation was provided by Savills. Prudential was the security trustee.