Social housing sector moves on deals as UK gilt yields hit ‘all-time lows’

Longhurst – which owns and manages more than 23,000 properties across the Midlands and East of England – said its bonds were four and a half times oversubscribed before achieving an all-in cost of 2.339 percent.

The funding will support plans to build around 750 new homes a year for the next five years.

The retained bond sales follows the initial issuance by its treasury vehicle, Libra 2 Treasury PLC, in May 2018, when the £250m deal – with £100m retained – was priced at a spread of 148 basis points and all-in cost of 3.347 per cent. It reached a coupon of 3.25 per cent.

Social Housing has asked for further details of the deal.

Meanwhile, THFC’s new aggregator vehicle Blend has tapped its benchmark 2047 £270m bond for £25m at 140bps over gilts and an all-in yield of 2.26 per cent, on behalf of new borrower Silva Homes, a 7,500-home association based in Berkshire.

That follows a sale of £13.2m of THFC’s own retained bonds in mid-February, which are being lent onto Irwell Valley Homes, a 7,600-home provider in Manchester. The THFC (Funding No. 3) bonds were priced at a spread over gilt of 120bps against the backdrop of a positive post-election market.

Several HAs are also understood to have been lining up private placements in the first quarter of the calendar year.

Piers Williamson, chief executive of THFC, warned that the record-low gilt yields could go against upcoming issuance.

He said: “Friday trading this week saw the volatility index (VIX or "fear factor index") hit an almost unprecedented 50 score and the 30-year gilt touch an all-time low of 0.66%.

"In this sort of environment the markets are completely locked to new issuance, so we and Longhurst were fortunate to be able to issue into the relatively calm preceding 48 hours.

"Next week is going to be a bit of a helter-skelter for those HAs lining up to issue.”