Sovereign agrees £250m unsecured credit facility to fund ambitious plans
4 July 2019
With ambitious plans to build even more new and affordable homes, Sovereign has entered into a ground-breaking three-year £250m unsecured revolving credit facility, syndicated across five lenders.
This deal will provide the 58,000-home housing association with financial security through a potentially uncertain political and economic period.
It will also provide the flexibility and liquidity to allow Sovereign to consider the best time to approach the debt capital markets to raise long-term funding to support its ambitious development programme – taking control through more land-led developments and building 1,900 new homes a year.
The lenders, led by NatWest, include Lloyds Bank, MUFG, National Australia Bank and SMBC.
This is Sovereign’s first unsecured borrowing and one of the first major unsecured bank facilities in the sector.
Barry Nethercott, Sovereign’s Chief Financial Officer, said: “We have an ambitious strategy, to take control and build more affordable homes, to invest more in our existing properties and communities, and to become leaders in customer service.
“To achieve this we need the fast and flexible access to finance offered by this new deal in order to keep building much-needed affordable homes through potentially uncertain times ahead.”
The deal was arranged by Centrus, who negotiated on Sovereign’s behalf.
Phil Jenkins, Managing Director of Centrus, said: “We were very pleased to work with Sovereign to deliver this exciting and innovative transaction which delivers large scale, unsecured bank facilities on competitive terms.
“The facility includes a new lender as Sovereign continues to widen its banking group on attractive terms and provides flexibility and a strong platform from which to approach the debt capital markets.”
Sovereign’s approach has been to secure a diverse range of funding to provide the necessary investment funds and maintain appropriate liquidity. This includes a mix of bond and bank finance, including a £150m loan facility with the European Investment Bank (EIB).
At 31 March 2019, Sovereign’s undrawn loans totalled £370m. The unsecured facility has added considerably to its liquidity headroom.
Winckworth Sherwood provided legal support.