Swan HA issues £250m bond at 3.625% coupon

The debut bond for the group, which owns and manages over 10,000 properties in East London and Essex, has a maturity of 33 years.

Nineteen investors participated in the bond, which achieved a spread of 130 basis points over the UK GT 3.5% 2045 reference gilt. It resulted in an all-in cost of funds of 3.682 per cent.

The announcement comes after Standard & Poor’s assigned an AA- rating with stable outlook to Swan, highlighting the provider’s ‘strong’ financial profile. The group used Swan Housing Capital to raise the funds.

Jamie Smith, deputy chief executive at Swan HA, said: ‘This is fantastic news and reflects the strength of our business. It is an important part of the wider re-structuring of our existing banking facilities which will increase our financial flexibility to support our future plans.’

Swan HA regained its G1 status this week, after offering ‘positive evidence that it is developing a consistent culture across the group’.

Lloyds Bank Commercial Banking, RBS and Santander acted as joint book-runners on the bond.

In addition, Swan has also agreed a new bilateral agreement with Lloyds.

Grant Vaughan, Corporate DCM director at Lloyds Bank Commercial Banking, said: ‘The appetite shown for Swan’s bond demonstrates that the UK social housing sector continues to offer investors a stable and attractive investment proposition.’

Swan had been downgraded to G3 in 2012 when employees at Swan were found to have deliberately falsified documents to claim £50m of development grant funding early to ‘enhance its reputation’.

The regulator says it now has assurance that governance arrangements are now sufficient to adequately control the organisation to enable it to meet its objectives.

Swan works in areas of high demand for social housing and is involved in a number of complex and multi-phase regeneration schemes.

S&P described Swan’s financial profile as strong, and gave the group a stable outlook to reflect a forecast of improving adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins to about 35 per cent of revenues.