EXCLUSIVE: THFC in £72m bond tap at 105bp margin
The Housing Finance Corporation has tapped its THFC Funding No 2 bond platform for £72.25 million at a margin of 105 basis points over the gilt, resulting in an all-in cost of funds of 5.58 per cent.
The margin comes in at below London & Quadrant HG's recent 115bp issue, demonstrating the continued popularity of social housing issuance with investors.
The cash will be divided among five RSLs, including three Northern Ireland landlords; it is the first time that Northern Ireland RSLs have secured bond funding.
RBC and RBS acted as book-runners, and the issue was twice over-subscribed.
THFC chief executive Piers Williamson told Social Housing magazine: 'We built the book in just 15 minutes, it was one of the quickest that the book-runners said they had ever seen.'
The deal demonstrated that bonds can be accessible to smaller organisations, he added: 'Belfast Community HA, with only £1 million participation, was able to benefit from similar bond terms to a much bigger association like L&Q by utilising THFC as a route to market.
'If you're a single issuer, you have one chance to get the pricing right and you have to live with the consequences.
'By doing smaller deals, you're less likely to get it wrong, and consortia vehicles are a safe way to mitigate risk.'
Mr Williamson predicted that, with gilt spreads set to rise, all-in bond pricing was currently bottoming out.
He said: 'Busting the 5.4 per cent level is going to be quite tricky.
'It will be tough to get all-in costs under those of the recent L&Q issue from now on.'
The deal took six weeks to bring to market.
The participating RSLs are:
Paradigm HG: £50 million;
Helm HA: £10 million;
North & West HA: £10 million;
Taff HA: £1.25 million;
Belfast Community HA: £1 million.
THFC Funding No. 2 was originally issued in July last year for £191 million at 185 basis points over the gilt, making an all-in cost of 6.35 per cent.
