England: £225m public bond completed at lowest ever rate in social housing sector

English housing association Accent Group has priced a £225 million public bond at a coupon rate of 2.625% with a further £125m retained for future sale.

The 30‐year listed bond marks the first for the 20,500 plus‐home landlord and the lowest ever coupon for a bond greater than 12 years within the sector.

The hugely successful roadshow included pitches to 40 investors in both Edinburgh and London and generated exceptional interest with the bond attracting a peak order book in excess of £1.3 billion (5.8 times oversubscribed), resulting in a spread of only 130bps over Gilts. This significant achievement for Accent also indicates the confidence the markets are exhibiting in the social housing sector.

The issue came after credit ratings agency Standard & Poor’s assigned Accent Capital plc its A+ long-term issuer credit rating on July 4.

The funding will support Accent’s development programme in which it aims to deliver circa 2,000 new, affordable homes over the next 5 years and enable the repayment of some of the existing bank debt. The remainder will be invested in existing homes and in providing transformational services for Accent’s customers.

Paul Dolan CEO of Accent Group said: “To have achieved a deal on our debut bond issuance with a final order book of £1.3 billion and the lowest HA coupon for a bond greater than 12 years ever is a brilliant outcome.

“This is the culmination of two years of hard work by the Accent team to reset the organisation’s corporate strategy, governance arrangements and operating model. Investor feedback was very positive about the coherence of our corporate strategy, current operating performance and our ability to effectively manage the Accent business over a national footprint.

“We will now continue to focus on our plans for sustainable growth and our ultimate aim of delivering a customer experience that is sector leading.”

David Royston, executive director of ICT and Finance, said: “The Accent team are delighted with the success of the issue as this marks the culmination of many months of hard work completely restructuring the groups financing and debt arrangements to ensure we are in a strong position to deliver our corporate strategy and make our contribution towards the UK housing crisis through the development of new affordable homes.

“Throughout the refinancing processes we have worked closely with our existing lenders who have continued to be very supportive by providing additional new facilities to the organisation as well as invaluable market insight and advice.”

Jonathan Clarke from Centrus, independent advisers to Accent, added: “Accent are a class act and it was very satisfying for all concerned to achieve a record‐breaking outcome after all the preparation.”

Barclays, Lloyds Bank Corporate Markets plc and NatWest Markets were bookrunners on the deal supported by Allen & Overy in respect of legal advice.

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