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Housing association issues £400m sustainability bond at 2%

PA Housing has issued a £400m sustainability bond at an all-in rate of just 2.026% to support its development ambitions for the next decade.

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The bond will be used to fund the development of 6,000 new homes by 2030 (picture: Getty)
The bond will be used to fund the development of 6,000 new homes by 2030 (picture: Getty)

The 23,000-home landlord issued the £400m 15-year bond, with £100m retained for future use, with a spread of 87 basis points over gilts, the government cost of borrowing.

The transaction aligns with the landlord’s sustainable finance framework (SFF) through which PA Housing works with investors looking for opportunities that meet their environmental, social and governance (ESG) requirements. The framework aligns with the United Nations sustainable development goals.

PA Housing becomes one of a handful of housing associations to issue sustainability bonds in recent months, following on from the likes of Aster Group and Clarion.

PA Housing said that the bond, which was five times oversubscribed, will be used to fund the development of 6,000 new homes by 2030 as well as investment in existing homes.

The landlord, which announced a potential merger with Accent Group in April, said raising the funds through its SFF enabled the association to secure competitive funding from a range of investors.

Simon Hatchman, executive director of resources at PA Housing, said: “This is a really important day for PA Housing. As a not-for-profit social housing provider, we have the potential to make a profoundly positive impact on people’s lives and we intend to do all we can to make this a reality.

“As a proud BAME housing association, it has been encouraging to see the extent to which our BAME background resonated with investors keen to see broader representation in leadership and board membership. This influenced our decisions on the allocation process.”

Kirsty Garrett, director in Lloyds Bank’s debt capital markets team, said: “The Lloyds Bank team successfully worked with PA Housing to issue its inaugural sustainability bond, aligned to its recently published sustainable finance framework.

“ESG is at the core of PA Housing, renowned for its long-standing heritage in supporting BAME residents and colleagues. This was clearly presented during the investor roadshow and, alongside a robust credit story, led to significant demand for the bond, with the order book peaking at over £1.2bn.”

Barclays also served as bookrunners on the deal, while Devonshires and Addleshaw Goddard provided legal advice. Chatham Financial acted as treasury advisor.

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