Major associations opt for sustainability bonds

The exercise follows a month after another major UK association, Places for People (PfP), made its debut sustainability bond in a £300m 2036 issuance.

That bond, with a fixed coupon of 2.5 per cent, was issued from the group’s £2bn Euro Medium-Term Note programme, and achieved a spread over gilts of 1.23 per cent. PfP also holds the Certified Sustainable Housing Label from Ritterwald, with a second-party opinion from Imug.

Both PfP’s completed bond and Peabody’s expected issuance apply a ‘use-of-proceeds’ approach to the sustainability label, meaning that funding received via the bond must be used for activities in line with the International Capital Markets Association’s sustainable bond principles.

As such, these differ from the ESG targets-based approach seen on the sector’s first and only ‘sustainability-linked bond’ issued by L&Q in January.

Other sustainability bonds seen in the sector to date – from the likes of Clarion, Aster and PA Housing among others – have all taken the use-of-proceeds approach.

Commenting at the time of Peabody’s framework launch, the housing association’s director of treasury and corporate finance Anthony Marriott said: “We’re pleased that our strong performance on a wide range of ESG metrics has been recognised by Ritterwald.

“This provides independent quality assurance on the positive impact we’re making for Peabody residents and colleagues, our commitment to providing safe, secure and affordable homes, and our approach to embedding sustainability in everything we do.”