Optivo primed for £250m bond issue
Optivo is primed for a £250m bond issuance after credit rating agency Moody’s affirmed the London G15 association’s A2 rating.
The 44,000 home landlord is expected to retain £100m of the new £250m bond, which can be sold any time in the next three years.
The bond will be the first issued by Optivo since it was formed last year through the merger of AmicusHorizon and Viridian Housing. The two organisations have previously issued bonds independently worth a combined £250m.
At the time of the merger Optivo inherited £1.16bn of drawn down debt from its legacy housing associations. AmicusHorizon’s previous loan syndicate was disbanded as part of the merger refinancing.
The proceeds from the new bond will pay off a variable rate facility and help to fund a development programme of 1,500 homes per year. That programme is expected to result in Optivo’s debt to asset ratio rising from 41 per cent last year to 50 per cent by the end of the 2022 financial year, according to Moody’s.
Four out of 10 of the homes planned in Optivo’s development programme will be for either outright sale or shared ownership.
Moody’s said this was “exposing the housing association to the cyclical housing market”.
The bulk of the social housing sector was downgraded by Moody’s last September, with no associations now sitting on an AA rating or higher.
The downgrade meant that some associations, including Genesis Housing, Places for People and B3 Living, are now rated at Baa, suggesting a greater level of risk for investors.
Moody’s said that Optivo’s rating “takes into account a moderate, but rising level of debt, an expected increase in development activity, and integration risk from the recent merger”.
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