Metropolitan Thames Valley Housing (MTVH) has completed its first own-named sustainability issuance, selling £250m of 15-year secured bonds at 115 basis points over gilts, and a coupon of 1.875 per cent.
The all-in cost of funds was 1.999 per cent.
Completed on Wednesday (28 July), the bond made use of MTVH’s sustainable finance framework, which is accredited by German impact consultancy Ritterwald.
The accreditation makes the London-based association the fourth in the UK to adopt the consultancy’s pan-European Certified Sustainable Housing Label, following Clarion – which used it to issue the sector’s first sustainability bond in 2020 – Catalyst and Link Group. The framework has a second party opinion (SPO) from agency Imug.
MTVH said that the boost to its liquidity would help it to deliver its new homes programme, which is targeting the delivery of 6,000 units over the next five years with anticipated expenditure of £2.1bn. It said that 80 per cent of these homes will be for affordable rent or shared ownership.
The group will also continue to invest in its existing homes, including building safety spend and energy efficiency improvements.
It will work to ensure existing homes reach Energy Performance Certificate (EPC) Band C or above by 2030, while new developments will be required to meet EPC Band B or above.
Commenting on the funding, Geeta Nanda, chief executive of MTVH, said: “I am delighted that we have been able to secure this new funding. It will support us to meet our ambitions that everyone should have a home and the chance to live well and to improve the sustainability of our new and existing homes to help tackle the climate emergency.
“Our commitment to sustainability in how we are building the new homes that the country so desperately needs was really welcomed by investors. We have a strong track record across the entire ESG agenda, but with this new resource we can do even more.”
The association has an A- credit rating from Standard & Poor’s, and an A from Fitch, both with stable outlooks, and is rated G1/V2 by the Regulator of Social Housing.
MTVH’s issuance of its first sustainability bond follows an earlier foray into ESG-linked funding by the group. In December 2020 the provider signed a three-year £50m sustainability-linked loan with BNP Paribas, with an interest margin linked to the association hitting certain environmental targets, including reducing greenhouse gas emissions from its office and homes.
Nine housing associations have now issued own-name sustainability bonds, including the recent 30-year £450m (£100m retained) outing by Anchor Hanover that marked the merged organisation’s debut public bond. The majority of these have taken place within the current calendar year.