Redrow qualifies to sell £300m of commercial paper to Bank of England under COVID facility

News09 Apr 2020Luke Cross

House builder Redrow has qualified to sell £300m of short-dated paper to the Bank of England (BoE) under its Covid Corporate Financing Facility (CCFF), it announced today.

Bank of England COVID facility gets under way

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House builder Redrow has qualified to sell £300m of short-dated paper to the Bank of England under its Covid Corporate Financing Facility. Housing associations are also applying for the scheme #ukhousing #socialhousingfinance

Redrow qualifies to sell £300m of commercial paper to Bank of England under COVID facility #ukhousing socialhousingfinance

It comes as the group has furloughed around 80 per cent of its workforce, having followed other volume house builders in a decision to close construction sites because of the pandemic and amid the housing market “freeze” instructed by the government.

The board, senior directors and wider directorate have also taken a 20 per cent pay cut.

Redrow announced that it had been confirmed as an eligible issuer for the CCFF this morning (9 April 2020), having told the markets two weeks ago that it planned to apply for the scheme.

Social Housing has reported that a number of housing associations (HAs) are applying and qualifying for the CCFF, enabling them to sell unsecured, short-dated commercial paper to the central bank.

Chancellor Rishi Sunak announced the CCFF as part of his multibillion-pound measures to provide liquidity to larger businesses making a material contribution to the UK economy.

The initiative will see the BoE purchase commercial paper – with a maturity anywhere between a week and a year under the CCFF – to help companies with the liquidity they need to run their businesses, and pay staff and suppliers.

The scheme was announced alongside the doubling of the Corporate Bond Purchase Scheme (CBPS) to £20bn, which got under way with auctions this week and includes housing association issuance.

John Tutte, executive chair at Redrow, said: “The response from colleagues and customers during these unparalleled times has been magnificent and I am grateful for their continuing support and understanding.

“The positive progress we have made on securing additional banking facilities means we can now finalise plans for our valued workforce and supply chain, to make an orderly return to work when we are advised it is safe to do so.”

The government has said that construction work can continue on sites, subject to firms following safety guidelines. However, a number – including housing associations – have said that social distancing cannot be achieved on site, while others have postponed work because of supply chain issues.

Developing HAs may see their cash positions improve during the hiatus in new build, enabling them to invest in other services.

Homes England and the Greater London Authority are now consulting with providers on what support they require during the coronavirus crisis.