Social housing bond aggregator MORhomes has raised £22m via a bond tap at a yield of 2.27%, its lowest rate to date.
The aggregator, which is owned by a consortium of more than 60 housing associations, tapped its 3.4% bond maturing in 2038, bringing its total issuance on the bond to £412m.
MORhomes said it took advantage of strong demand for housing association bonds, also achieving its tightest credit spread so far at 160 basis points over gilts, the government cost of borrowing.
The £22m funding was raised for a new borrower, 7,500-home Housing Solutions, taking its total loan book to £429m for 18 housing associations.
MORhomes, which was set up in 2018, said the transaction highlights the benefits of its structure which allows rapid market access at a time of economic uncertainty.
Patrick Symington, chief executive of MORhomes, said: “We are delighted to have executed this transaction and achieved an excellent price for our new borrower, Housing Solutions.
“With a range of other benefits such as flexible use of security and minimal business covenants, we are becoming one of the leading options for fixed-term debt for housing associations.”
David Joyce, director of finance at Housing Solutions, said: “We are delighted with the market interest and the pricing result, which underlines the support for the sector and Housing Solutions.
“The funds will enable Housing Solutions to further pursue our mission by delivering much-needed energy-efficient affordable homes for local people.”
Barclays and Allia C&C acted as joint lead managers on the transaction.
MORhomes, which primarily lends to smaller housing associations, currently aligns all its bonds with the International Capital Market Association’s ‘social bond principles’ but announced last year that it would take a further step to issue a sustainability bond in future.