NatWest Markets is arranging the deal, which will have tenors ranging from 15 to 35 years. Bids are due next week, with the initial target set at £85m.
Housing associations have been a rare glimmer of light in an otherwise bleak picture for UK private placements. While staple corporates and utilities were drawn to bonds and bank debt to fend off difficulties of the coronavirus pandemic, housing associations have stayed true to the private market and provided investors ample dealflow.
Origin Housing issued £125m of private placement notes earlier this year. Legal & General lent Believe Housing some £85m of private placements in late April, the first from the sector which tied the debt’s margins to the company’s sustainability performance.
Institutional investors from both the UK and the US have taken a shine to the sector. The borrowers are interested in long-dated debt — which helps the investors match assets with liabilities, but also the sector is tightly regulated and has stable cash flows.
Southway, for example, had a £33m turnover with a £12m operating surplus in 2020, according to company filings, versus a £31.7m turnover and a £10m surplus in 2019. “Housing associations are a match made in heaven for PP investors,” said a banker who has brought several HAs to market. “But the best part of it is there are still many more to come.”