All-time low bond yield achieved by Futures Housing Group
Futures Housing Group has issued a retained £50m bond at what is believed to be the lowest rate ever agreed by a housing association in the UK for a long-dated transaction.
Savills Financial Consultants worked with NatWest Markets to support Futures to achieve the new sector-low cost of funds. The bond was issued through Futures Treasury PLC and will be used to support the 10,000-home housing association’s growth plans. Under current proposals, Futures aims to build at least 1,200 homes by 2024.
The £50m was retained from an initial £200m bond that was issued by Futures in February 2019, with a coupon rate of 3.375% and a spread of 168 basis points over the cost of government debt, or gilt rate.
The retained bond – that was priced on 17 June – achieved a yield of 1.741%, reflecting a spread of 115 basis points over the benchmark government gilt rate. The deal completed on 24 June.
Mike Stevenson, Chair of Futures Housing Group, said: “This is a tremendous outcome and reflects the robust strength of our business, our fantastic track record and our ambition to grow and to continue to develop new homes at pace. These funds will not only fuel the construction of even more new homes, but will also help us to improve our environmental sustainability in the longer term. Meeting housing need is our underlying purpose and this fresh injection of funding will help us do exactly that.”
Sangita Surridge, Finance Director at Futures Housing Group, added: “We are so pleased to have achieved this outstanding result in the middle of what is a very challenging time globally and for our sector. A lot of people have worked hard to make this happen and I want to thank all the specialists who have supported us, particularly Savills Financial Consultants, NatWest Markets and Anthony Collins Solicitors."
Mike Roche, Director at Savills Financial Consultants, said: “We are absolutely delighted to have been able to support Futures to achieve such an excellent result. This record-low cost of funds ensures Futures can maximise its positive impact in its communities across the East Midlands.
“Savills Financial Consultants has worked with Futures for a number of years and advised on the original bond and the securing of its A+ rating. While external factors related to the current COVID-19 pandemic undoubtedly played a part in this result, the strong investor appetite for the bond was also a testament to the strength of Futures’ business, its response to the current situation and its plans over the coming months and years. We make sure that our clients are well prepared and this agile approach has paid dividends for Futures with its well-timed approach to the market.”
George Flynn, Vice President at NatWest Markets, said: “We’re delighted to once again support Futures with this highly successful retained sale. The result is testament to the strength of the Futures credit story, the agility and speed of execution and is evidence of the strength of investor appetite for the housing association sector.”
Savills UK provided valuation support to Futures; Issuer's Counsel was Anthony Collins Solicitors; Investor Counsel was Addleshaw Goddard; and Bond and Security Trustee was Prudential.