Guinness issues £400m bond at 2% coupon marking further tightening of sector pricing

The 65,000-property housing and care provider sold £250m of the bonds yesterday (15 April 2020) at a spread of 145 basis points over the UKT 4.25% 2055 gilt and an all-in cost of 2.02 per cent, following a single day of marketing to investors.

It has retained £150m for later sale, but increased the overall size of the issuance after the bonds were “significantly oversubscribed, demonstrating continued investor confidence in Guinness and in the social housing sector”.

Phil Day, group finance director at Guinness, said: “The very strong demand for our bond and the final spread over gilts of 145 basis points that was achieved shows that the capital markets remain supportive of housing providers.

“We increased the size of our bond during execution which was reflective of the strength of the order book.”

The deal, which attracted 39 investors, also marks the first issuance since housing association bonds – including Guinness’ issuance – were confirmed on the Bank of England’s corporate bond-buying programme, extended by chancellor Rishi Sunak as part of the government’s response to support businesses, the markets and broader economy during the COVID-19 pandemic.

Guinness follows Sanctuary Group and Optivo into the capital markets earlier in April and at the end of March respectively.

Its bonds will support some refinancing and the group’s development aspirations to deliver 5,500 new homes by 2024 and 12,500 over the next 10 years.

Barclays, MUFG and NatWest Markets acted as joint bookrunners on the transaction, with Newbridge as treasury advisor. Trowers & Hamlins were the legal advisors.

JLL provided the funders’ valuations, while Allen & Overy provided funders’ legal advice.