Centrus supports Home Group on £350m bond issue
Centrus has supported Home Group, one of the UK’s largest housing associations, on a £350m bond issue, of which £100m has been retained. The £250m raised will be used to support their strategy and development programme.
The 24-year bond achieved one of the lowest overall rates of recent housing association transactions. The spread over the reference gilt was 170 basis points and the gilt fell 7 basis points during the course of the day alone, making for an effective fixed rate of 3.24%. Home Group has a rating from Standard and Poor’s of A- (stable).
Investor feedback on the deal, which was oversubscribed two and a half times, was extremely positive, with many citing Home Group’s strong management and governance record and geographic diversification.
Centrus had worked with Home Group to arrange £200m of bridge financing from the three banks involved in the deal just before Christmas. That transaction was structured as three bilateral facilities of equal sizes and Centrus had worked with Home Group on the negotiation and documentation of the three facilities. The bridge facilities provided effective risk mitigation against potential market uncertainty and volatility.
Mark Henderson, Home Group’s Chief Executive, said This is a great deal, that reaffirms Home Group’s strength as an organisation. It will support our target of delivering 10,000 homes by 2022.
Jonathan Clarke, Managing Director at Centrus, said This transaction is the culmination of six months’ work on strategy. Raising long-term funding at this level is a great outcome for Home’s management team and all its stakeholders. Centrus is pleased to have again supported a leading housing provider on a bridge facility, giving flexibility to the borrower, followed by a very successful bond issue.
Steve Hallowell, Director of Treasury and Asset at Home Group said We are delighted to have secured long-term funding on very good terms to support our future plans and are very grateful for the excellent support provided by Jonathan Clarke and the team at Centrus during our recent fundraising activities.
The three bookrunners were HSBC, MUFG and NatWest Markets, with Devonshires advising Home Group and Addleshaw Goddard advising the banks and bond trustee, with Savills as valuers.