bLEND secures 40-year money at 2.467% for newly-merged HA

bLEND today issued its first 40-year bond, raising £75m at an all-in rate of 2.467% for a newly-merged housing association.

The transaction priced at a spread of +128 over Gilts after tightening significantly thanks to healthy investor interest, but also reflecting a new issue premium for the new, longer-dated bond series.

Proceeds of today’s issue will go to GreenSquareAccord, which completed its merger in April and now owns and manages around 25,000 homes from Newcastle to Salisbury.

The transaction – the latest new series to be done under bLEND’s Social Bond Framework – completed against the backdrop of rising concerns over inflation amid the ongoing recovery from the global pandemic. The ability to lock in long-term funding and low rates through bLEND allows housing associations to mitigate and manage that risk.

Today’s issuance gives bLEND a range of maturities from 2034 to 2061. Building this maturity curve is a central plank of the bLEND model and with four different maturities available, provides flexibility and choice to borrowers. The deal also marks the first forty-year loan from THFC, bLEND’s not-for-profit parent company, since 1987, when it issued the very first forty-year deal – a deep discount bond at an effective yield of 10.786%.

bLEND’s CEO, Piers Williamson, said: “One of the great features about bLEND is the flexibility it affords borrowers without compromise on price. Given the resurgence of inflation as a risk factor, the ability to lock in a 2.467% cost of funds for forty years is a big deal and allows our borrowers to look to the future with confidence as they focus on the huge challenge of becoming net zero carbon by 2050.”

With the all-in cost of funds below 2.467%, bLEND has once again demonstrated the consistency which has contributed to its success, despite the relatively small size of the new series and the general preference among investors for the thirty-year maturity over longer paper. bLEND’s total issuance recently passed £1bn, marking it out as a significant funder to the social housing sector. In 2021 alone it has lent £270m to five new housing association borrowers.

GreenSquareAccord came about through a merger of equals with a view to forming a housing and care provider with greater capability and capacity to deliver enhanced, locally focused services to customers, while innovating and responding to the challenges of the future.

Stuart Fisher, CFO & Deputy CEO at GreenSquareAccord, said “We are delighted to have secured a long-term funding package through bLEND that will help deliver our growth aspirations and fulfil our merger promises. This funding will help us deliver our commitment to develop 1,000 new affordable homes a year for some of the most vulnerable people in society. GreenSquareAccord will continue to develop and deliver high-quality services that meet the needs of our existing customers and the communities in which we serve.”

Mr Williamson added: “We’re delighted in particular to be working with GreenSquareAccord.  They exemplify the sector’s growing record of innovation as well as providing homes that are not just affordable but also sustainable.”

bLEND passes £1bn

bLEND has returned to market a week after the launch of its Social Bond Framework with a £35m tap of its 2054 maturity at its lowest ever credit spread.

The spread over Gilts on today’s transaction was +108bps, producing an all-in rate of 2.45%, despite choppy market conditions after this week’s CPI announcements from the USA.

It brings bLEND’s total issuance over the 2.5 years since it was founded to more than £1bn. The original business strategy targeted £1bn over 5 years, and the speed with which this was achieved reflects the diversity of the appeal of the innovative medium-term note (MTN) structure.
The deal also marks the funder’s first social bond issuance.

An initial £25m was priced on Friday for Valleys to Coast, a housing association managing over 5,800 homes across Bridgend, South Wales. The remaining £10m is intended to be priced on a deferred basis.

bLEND attributes the tight spread to the strong investor interest after the aggregator – which is run by The Housing Finance Corporation (THFC) – converted all £1Bn of its issuance to date to social bonds, with today’s issuance being the first ‘new’ social paper.

This conversion allowed bLEND to reach a spread 5bps inside the secondary market, representing a negative new issue premium. bLEND’s total issuance is now £1,023,000, of which £195m has been issued in 2021 alone.
Valleys to Coast will use the funding to refinance existing debt, help maintain its strong financial profile and continue to provide a high-quality, local service.

Claire Marshall, Corporate Director of Finance, Governance, Strategy and Performance at Valleys to Coast, said “Our purpose is to provide homes and places where people feel safe and happy. Today’s funding through bLEND is a core part of helping us to achieve this vision.

“As the conversation turns to how the country emerges from the pandemic, the role of housing associations will be more important than ever, and we are well placed to meet the need for truly affordable housing.
“Securing this low-cost, long-term funding through bLEND will help us to meet our ambitious 10-year corporate plan objectives and to maximise our investment in our homes and communities.”

The deal comes at the end of a week which, despite the market volatility, has seen two further successful HA Bond Issues: for Beyond Housing and Paradigm.

bLEND’s CEO, Piers Williamson, said “It’s fantastic to see bLEND reach £1bn in half of the time originally planned, and it reflects both the design of bLEND’s model which gives housing associations flexibility without compromise on price, and the hard work of everyone in the bLEND team.

“We’ve now converted all bLEND bonds into Social bonds, reinforcing the focus on social impact which sits at the heart of bLEND. It’s great to see the positive response from the sector, but too the knock on effect on pricing, which enables us to secure a great rate for associations like Valleys to Coast, who do such important work for their communities.”