24th May 2012
Sovereign Housing Association is looking to consolidate its position as one of the most influential players in the UK housing market after successfully launching a £250 million bond issue.
The 30-year bond, which is rated Aa2 by Moody's and AA- by Standard and Poor's, has proved popular with investors and, following a successful road show, a very low rate of 4.77% has been achieved.
Ann Santry, Sovereign's Chief Executive, said:
"Sovereign is a successful organisation with an ambitious but credible strategy for growth. Investors have recognised this and given their support to our plans through their investment in the Company.
"Equally attractive to them are our new simplified governance structure and impressive track record in developing new homes.
"The housing sector is facing a range of challenges, including the falling levels of government grant and the financial implications of welfare reform. This significant extra funding will enable us to carry on providing new homes, which is a key part of our future strategy."
The bond has been secured against 3,800 of Sovereign's existing properties.
Martin Huckerby, Sovereign's Finance Director, commented:
"We have acted now because the price is right. We have been able to take advantage of the attractive bond market and low gilt price, and this, ultimately, will allow us to invest more in providing affordable housing, whether through development or through the acquisition of stock.
"Our financial strength and successful track record have enabled us to access the bond market at historically low levels and we will put the money to good use in providing desperately needed new homes."
Sovereign's £175 million bond issue in September 2009 was, at the time, praised for the low price achieved, largely as a result of investors' demand for highly-rated long-term bonds from financially strong organisations.
