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Peabody prices 12-year £350m sustainability bond at gilts + 125bps

News25 Feb 2022Sarah Williams

Peabody has issued the first bond under its new sustainable finance framework, pricing a 12-year, £350m labelled issuance at 125 basis points (bps) over gilts.

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Peabody has priced a £350m sustainability bond amid a turbulent week (picture: Getty)
Peabody has priced a £350m sustainability bond amid a turbulent week (picture: Getty)
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Peabody prices 12-year £350m sustainability bond at gilts + 125bps #SocialHousingFinance #UKhousing #ESG
Peabody has issued the first bond under its new sustainable finance framework, pricing a 12-year, £350m labelled issuance at 125 basis points over gilts #SocialHousingFinance #UKhousing #ESG

Thirty-seven investors participated in the transaction, leading to a tightening on the margin after initial price talk of around 140bps.

 

The senior secured sustainability bond has a coupon of 2.75 per cent per annum, and Peabody said that the all-in cost of funds is also 2.75 per cent.

 

The bond priced on Wednesday (23 February) after investor calls earlier in the week. It has a settlement date of 2 March, and matures in September 2034.

 

The outing to the markets was made as reports emerged this week that the body of Sheila Seleoane, a 61-year old Peabody resident, had been left undiscovered for two years in her flat in Peckham, south London, despite concerns raised by neighbours.

 

Police made the discovery after entering the property on Friday (18 February) and are reported to be treating the death as “unexplained” but not suspicious.

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Peabody’s chief executive Ian McDermott described the news as “heart-breaking” and acknowledged that lessons must be learned after “something, or a number of things, have gone wrong”.

 

In a letter published on Wednesday, Mr McDermott said: “We are all devastated by what has happened. Quite rightly everyone wants answers and so do we. No one should have been left like this, it is heart-breaking and we understand the anger and frustration.”

 

Peabody declined to comment when asked by Social Housing whether the news of the incident, which emerged on Monday, was raised by investors during the calls earlier this week, and whether there was any impact on appetite for the bonds.

 

The outing to the market was made through treasury vehicle Peabody Capital No 2, with Peabody Trust as the borrower.

 

In accordance with the International Capital Market Association’s sustainable bond principles, the proceeds will be used in accordance with the sustainable finance framework unveiled by Peabody earlier this month.

 

These include:

  • Renovating and retrofitting existing homes to improve Energy Performance Certificate ratings and energy efficiency, and projects to protect as many people as possible from fuel poverty and high heating bills
  • Boosting access to electric charging points in Peabody neighbourhoods for both residents and employees. Peabody’s aim is for all its vehicles to be electric by 2030
  • Placemaking and projects to improve green spaces and public realm, helping to make a positive difference for health and well-being
  • Continuing to build genuinely affordable homes for people in need

NatWest Markets was the sustainability structuring advisor on the transaction, and was joint bookrunner along with Barclays Bank, Lloyds Bank Corporate Markets and SMBC Nikko Capital Markets.

 

The registered provider’s funding advisor was Rothschild, with legal advice from Trowers & Hamlins. Funders’ valuation was from JLL, with legal advice from Addleshaw Goddard, and the security trustee is M&G Trustee Company.

 

The issuance priced a day before Russia’s military invasion of Ukraine on Thursday (24 February) rocked global financial markets.

 

Commenting on the issuance, Anthony Marriott, director of treasury and corporate finance at Peabody, said: “This is a positive result at an exceptionally uncertain time in the market.

 

“We welcome the strong interest from a wide range of investors and the transaction will enable us to deliver on a range of objectives as set out in our sustainable finance framework.

 

“We are grateful to all four bookrunners – NatWest Markets (sustainability structuring advisor), Barclays, Lloyds and SMBC Nikko.”

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