Accent issues £225m public bond at lowest ever coupon
Centrus advises Accent Group on Public Bond Issuance at lowest ever coupon for long term Capital Raise in the Social Housing Sector
Accent Group – a national housing association operating in the North, East and South of the country ‐ has priced a £225 million public bond at a coupon rate of 2.625% with a further £125 million 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.
Funding to support Accent Housing Group’s development programme
The issue came after credit ratings agency Standard & Poor’s assigned Accent Capital plc its A+ longterm issuer credit rating on 4 July 2019. 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.
Comments from Accent’s Executives on record public bond issue
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 2 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.
Commenting on the process, David Royston, Executive Director of ICT and Finance, said: The Accent team were delighted with the success of the culmination of many months of hard work completely restructuring the group’s financing and debt arrangements to ensure Accent is in a strong position to deliver its corporate strategy and make its contribution towards addressing the UK housing crisis.
Central to this work was the contribution from Treasury Advisors, Centrus, who were pivotal in the production of the treasury strategy and the negotiation of Accent’s revolving credit facilities, providing clear and appropriate advice to Accent’s Board and finance team’s in the lead up to the bond issuance, and working with Accent as the Bond was issued to ensure that Accent were able to both understand the process and make the appropriate decisions.
Centrus and our wider advisory team contributed hugely to Accents record breaking bond, which remains the first 30 year, own name bond in the sector, to secure a coupon rate of interest of under 3% - at 2.625%.
Centrus advised Accent on the development of the strategy, banking negotiations, execution of hedge breakage and the debt capital markets process. This demonstrates the holistic advice provided by Centrus across corporate finance, banking, derivatives and debt capital markets.
Jonathan Clarke from Centrus said Accent are a class act and it was very satisfying for all concerned to achieve a record‐breaking outcome after all the preparation.
Ton find out more about the services that Centrus provides to the Social Housing sector, please click here.