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A good time to borrow for housing associations

We have seen over the past week that Moody's, the credit rating agency, has opted to affirm all ratings for housing association issuers despite downgrading its ratings in other sectors.  This is positive news and due to the sector benefitting from expenditure flexibility allowing for reductions in costs to respond to poorer economic and financial conditions.  

This, along with the low gilt rates, may provide an opportunity for housing associations to borrow from the bond markets securing low rate borrowings whether via own name issuances, retained bond issuances, private placements or via aggregators such as bLEND Funding Plc.  

Even if the cash is not required now, deferred deals are possible, allowing housing associations to take advantage of the low rates but avoid the carry costs.  Deferred deals are also now possible via bLEND which completed its first deferred transaction (a first for an aggregator in the social housing sector) early in October closely followed by a second deferred transaction last week.

A flurry of housing association (HA) bond issuance is expected before the end of the year after ratings agency Moody’s opted not to follow up its downgrade of UK sovereign debt with a downgrade of HA issuers.

Tags

housing, funding, finance, bonds, private placements, revolving credit facilities, joint ventures