Long-dated issuance returns as SNG prices 33-year £400m bond

The bond was priced at 108bps over gilts (UKT 1.75 per cent due 22 July 2057) and with an all-in cost of funds of 5.603 per cent.

SNG said the 33-year tenor makes it the first public long-dated bond issued in the sector since November 2022. This was when GreenSquareAccord secured a £400m sustainability bond. It is also one of the sector’s longest-dated Sterling transactions in recent years.

The bond issuance followed Places for People raising £500m in December, with a term of 18 years, through what is believed to be the largest single-issue bond in the sector. 

Capital markets issuance by or on behalf of housing providers in the past two years has been limited, and largely dominated by smaller, private deals and shorter-dated transactions. 

Peter Benz, chief financial officer at SNG, said: “We are very happy with the outcome of this transaction. The strength of interest we received demonstrates the level of investor confidence in our plans and the continuing attraction of the affordable housing sector as a competitive investment destination.”

Barclays, NAB, Santander and SMBC Nikko were the bookrunners and 80 investors participated in the deal.

The asset cover was 105 EUV/115 MVT and the credit ratings were A3 from Moody’s and A from Standard & Poor’s.

Centrus served for SNG in a limited advisory role and Trowers & Hamlins conducted the provider’s legals.

JLL undertook the valuation, Pinsent Masons served as the funders’ legal advisor and M&G Trustee Company was the security trustee.

According to the financial results for the year ending 31 March 2023 for both Sovereign and Network Homes in their last results prior to the merger, both saw a year-on-year drop in their surplus.

Sovereign posted a surplus of £66.1m, a fall from £86.6m in 2021-22, while Network reported a surplus of £5.2m, a decrease from £9.6m in the previous year.

According to the results, Sovereign completed 1,672 new homes in the year, 94 per cent of which were affordable and 476 more than in 2021-22. Network completed 207 affordable homes in 2022-23, a slight drop from 232 in the previous year.

Update: at 08.55am, 07.02.24

The article was updated to state that that pricing was 108bps over gilts.