THFC got an A+ credit rating from agency Standard & Poor's, indicating that it is a sound investment. The rating is four grades from the agency's highest possible score, AAA, and significantly higher than the BBB+ score held by most rated housing associations.
THFC raises money in the capital markets and passes it on to housing associations in the form of long-term loans. The rating will enable THFC to get funding more cheaply and in turn bring down prices for its borrowers.
Fenella Edge, THFC's treasurer, said: "Market conditions are favourable at the moment because long-term rates have not gone up as much as short-term rates. We can use the rating as a base and get a better rate for new [bond] issues."
The rating, first mooted last June (HT 6 June 2003, page 14), is part of an overhaul of THFC, which has included a £10m loan from Halifax Bank of Scotland to pass on to borrowers.
THFC, which has £1bn of loans with 130 housing associations, is the largest portfolio of housing association loans to get a public rating.
Robert Robinson, director at Standard & Poor's, said it had awarded THFC a high rating because of its prudence and because the value of the assets on which the loans are secured is higher than the sums being lent.
He said: "They look like quite a credit-worthy organisation because housing is the only sector they lend to and there's a history of no defaults in that sector."
Meanwhile Standard & Poor's has qualified the rating of Home Group. The association, which was rated A+ rating in August 2003, has been given an A+ with negative outlook rating because of its decision to spend more on maintenance.
Robinson said this decision would reduce the "cash cushion" of the group – a consideration in its rating.
The negative outlook tells investors that the group's financial position has changed slightly since the original rating was given. Robinson said this did not mean the group would be downgraded as there was scope for the group's financial situation to improve.
Source
Housing Today
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