Blend Funding, the subsidiary vehicle of The Housing Finance Corporation (THFC), has completed its first issuance since launching a social bond framework earlier this month, achieving its lowest credit spread to date.
The company said that it credits the spread achieved to the “strong investor interest” following the conversion to social bonds.
It said: “This conversion allowed Blend to reach a spread five basis points inside the secondary market, representing a negative new issue premium.”
The transaction also sees Blend’s total issuance surpass £1bn since launching in 2018 – a milestone it had originally planned to attain over five years – to reach £1.02bn.
The subsidiary’s bond programme takes the form of a £2bn medium-term note (MTN) programme, allowing it to issue up at a range of maturities, and it also has options to increase the total above £2bn.
Valleys to Coast, which manages more than 5,800 homes across Bridgend in South Wales, will use the funding to refinance existing debt, and to support its work more broadly.
Claire Marshall, corporate director of finance, governance, strategy and performance at Valleys to Coast, said: “Securing this low-cost, long-term funding through Blend will help us to meet our ambitious 10-year corporate plan objectives and to maximise our investment in our homes and communities.”
Piers Williamson, chief executive of Blend and THFC, said: “We’ve now converted all Blend bonds into social bonds, reinforcing the focus on social impact, which sits at the heart of Blend.
“It’s great to see the positive response from the sector, but too the knock-on effect on pricing, which enables us to secure a great rate for associations like Valleys to Coast, who do such important work for their communities.”
The deal is the latest ESG-related deal in the capital markets for housing association borrowers, after Paradigm housing issued its debut ‘sustainability’ bond last week, joining just four other HAs known to have done so to date.