ACCENT Group says it has issued a 30-year listed bond with the lowest ever coupon rate across the sector for raising long-term capital.
The organisation has priced a £225 million public bond at a coupon rate of 2.625% with a further £125 million retained for future sale. This marks a first for the housing organisation and the lowest ever coupon for a bond greater than 12 years within the sector, it says.
During its roadshow, Accent pitched 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 (that is, it was 5.8 times oversubscribed). This resulted in a spread of only 130bps over Gilts. T
All told, it represents a strong indication of the confidence markets are exhibiting in the social housing sector.
The issue came after credit ratings agency Standard & Poor’s assigned Accent Capital plc its A+ long-term issuer credit rating on 4 July 2019.
Accent says the funding will support its 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.
“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,” said Paul Dolan, Accent Group’s chief executive.
“This is the culmination of two 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.”
David Royston, executive director of ICT and finance, added: “The Accent team are delighted with the success of the issue as this marks the culmination of many months of hard work completely restructuring the groups financing and debt arrangements to ensure we are in a strong position to deliver our corporate strategy and make our contribution towards the UK housing crisis through the development of new affordable homes.
“Throughout the refinancing processes we have worked closely with our existing lenders who have continued to be very supportive by providing additional new facilities to the organisation as well as invaluable market insight and advice.”
Barclays, Lloyds Bank Corporate Markets plc and NatWest Markets were bookrunners on the deal supported by Allen & Overy in respect of legal advice.
Matt Clasper, director of debt capital markets EMEA at Barclays, said: “This deal demonstrates how the Barclays Corporate and Investment Banking business works as one to enable clients such as Accent to access the capital markets for the first time. The strong demand from investors and attractive pricing is a testament to the management team and the strategy of focusing on the core social housing business, with geographical diversity across England.”
Kirsty Garrett, associate director, debt capital markets, Lloyds Bank Corporate Markets plc, said: “The Lloyds team was pleased to see such a warm response from investors for a debut issuer in the sector. Accent’s A+ credit rating, diverse regional presence and strong management team helped drive investor demand, resulting in a high-quality final order book that priced tight to sector comparables. The transaction sets a positive precedent for future issuance by Accent.”
Dominic Brindley, head of public sector at NatWest Markets said: “The NatWest Markets team is delighted to have assisted Accent in its debut benchmark public bond, achieving the lowest HA coupon for a bond greater than 12 years. The significant oversubscription and tight pricing is a testament to the organisation and performance on the roadshow as well as a glowing reference of the Accent credit story. This bodes exceptionally well for future supply in the Social Housing Market.”