Home got an A+ credit rating from rating agency Standard & Poor's. It's the highest rating given to a British housing association and places Newcastle-based Home on a par with supermarket Tesco and above Marks & Spencer.
Credit ratings are used by banks and institutional investors to help decide whether to lend money to a company. Companies that make their ratings public can issue bonds on the financial markets and will find it easier to borrow from banks. Others keep their ratings private and use them to measure performance.
Robert Robinson, associate director at Standard & Poor's, said Home achieved a high rating because it has lower debt than other associations of a similar size, is easily able to repay interest on its loans and has a good national spread of properties.
Home will use the rating to borrow from banks that it has not worked with before.
Home's finance director Alan Park said: "We will be looking for in the region of £100m in the next 12 to 15 months. We will probably use conventional [bank loan] funding.
"The rating will be helpful for funders who have not dealt with us before and those who have not dealt with the sector in the past."
Home Group's A+ comes just a week after North British Housing got an equivalent rating from rival agency Moody's (HT 11 July, page 14).
Robinson said: "We have seen a growth over a number of years in the number of associations getting ratings. Most [of these ratings] are still not made public but there is an increasing number who have got a rating or are considering one."
Shaftesbury Housing Association and Broomleigh have both previously been rated A-. Both have made their ratings public, and a dozen more registered social landlords are believed to have private ratings.
Eventually, RSLs will be able to issue bonds on the strength of their rating without having to put up properties as security, as they do usually.
However, a larger number of associations would need to be rated before this could happen, Robinson said.."
Source
Housing Today
No comments yet