UK's largest private landlord issues £350m bond priced wider than leading HAs

The senior secured bond has been priced at a coupon of 3.375 per cent, having received a BBB- credit rating from S&P. This rating is lower than typical HA levels, which benefit from an uplift due to UK government support.

The pricing of the bond is wider than a number of recent issuances from housing associations.

These include Clarion, which issued a much longer-dated, 30-year £250m bond at 3.125 per cent under its secured note programme earlier this month.

Optivo and London & Quadrant have also priced their bonds at a cheaper rate for longer-dated issuance when they turned to the capital markets this year. Optivo raised £250m in March with a coupon of 3.283 per cent, while L&Q’s £500m issuance in the same month included a 10-year tranche at 2.625 per cent and a 35-year tranche at 3.125 per cent.

Proceeds from Grainger’s bond issue will be used to redeem an existing corporate bond, due to mature in 2020.

The company said the refinancing “achieves both a reduction in cost of debt and an extension of its maturity profile”.

Grainger’s chief financial officer Vanessa Simms added: “We are delighted by the response to this bond issuance. The investor demand is a testament to the successful implementation of our strategy and our growing private rented sector (PRS) portfolio which strengthens our income return.

“The refinancing is an important milestone in extending our maturity profile and provides long-term interest rate certainty at an attractive coupon, reducing our annual interest costs by £3m.”

Joint bookrunners on the bond were Barclays, HSBC and Royal Bank of Scotland.