THFC sells £27.5m of bonds despite ‘extreme market volatility’ from Ukraine invasion
The Housing Finance Corporation (THFC) has sold £27.5m of retained bonds in two deals on behalf of three borrowers, despite ongoing market turbulence.
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The bond aggregator said its credit spread remained stable during the past month despite what it described as “extreme market volatility” arising from the war in Ukraine.
On 21 February, THFC placed £9.5m of its Funding No 3 bonds at a spread over gilts of 130 basis points (bps), giving an all-in cost of funds of 2.836 per cent.
On 30 March 2022, a further £16m was sold at 124.8bps, giving an all-in cost of funds of 3.13 per cent.
The announcement of the deals, made through THFC’s Funding No 3 company, come after its funding subsidiary Blend became the first sector issuer to return to the capital markets on 3 March following a temporary shutdown after Russia invaded Ukraine in late February 2022.
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Mixed appetite over for-profit/HA partnerships on existing stock amid ‘significant moment of change’The £16m from the 30 March transaction will go to Midlands-based housing association Trent & Dove, which is an existing borrower through the No 3 bond.
Earlier this month, Trent & Dove also took £55m of deferred funding through Blend as part of the £107m tap, at a cost of between 2.97 per cent and 3.07 per cent.
February’s Funding No 3 bond sale was split between Durham Aged Mineworkers’ Homes Association, which received £8m, and the remaining £1.5m went to Soho Housing.
Durham Aged Mineworkers’ Homes Association is the largest almshouse charity in England, with 1,800 homes across the North East.
The landlord said the £8m would support its development of new affordable homes.
Paul Mullis, chief executive of Durham Aged Mineworkers’ Homes Association, said: “Working with THFC to put this new funding in place has been a great experience, and we are really excited at the opportunity it provides us to develop many more homes for the older people of the Durham Coalfield over the next few years.”
Soho Housing’s £1.5m will go to refinancing its existing ‘Social Housing Finance’ loan from THFC, which matured in December 2021.
The landlord provides around 800 homes across the London boroughs of Camden and Westminster.
Jane Harrison, finance director at Soho Housing, said: “Today’s loan represents a new chapter in our 25-year relationship with THFC, and will see new funds invested in improving our existing stock and developing much-needed affordable homes for our communities in Camden and Westminster.”
THFC said there are £46.5m of retained Funding No 3 bonds yet to be allocated.
Piers Williamson, chief executive of THFC, said: “Today exemplifies the importance of THFC’s role providing reliable and consistent access to capital markets funding, even at a time of severe stress in the financial markets.
“It is also a chance to reflect on the success of THFC Funding No 3 as evidenced by the sheer breadth and diversity of its borrowers.
“At THFC we are fiercely proud of our continued role in widening accessibility of bond funding to fantastic associations like these.”
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