Sovereign strengthens liquidity position to support growth post-Covid 19
1 May 2020
Sovereign Housing Association successfully issued a record-breaking £125m retained bond in the capital markets on Friday 24 April, opting for a one day execution to better manage potential market volatility.
The bond was retained by Sovereign in October 2019 when the company issued a £375m, 29-year bond with a 2.375% coupon.
As one of the largest housing associations in the country, with almost 60,000 properties across the south of England, Sovereign provides quality, affordable homes, within strong and sustainable communities.
This £125m bond - which was well-oversubscribed at £800m - will strengthen Sovereign’s liquidity position further, enabling it to invest in the quality of its homes and services, as well as re-starting development of sites, in the post-Covid-19 recovery period.
Tracey Barnes, Sovereign’s Chief Financial Officer, said: “We saw very good demand from all of the key UK real money accounts, amassing a high quality orderbook with a number of triple digit orders. We priced at a final re-offer yield of 1.974% - the first ever sub-2% yield for a 20+ year issuance in the sector.
“Throughout this crisis we have tried to maintain a steady and reliable presence for our residents, continuing essential services and pledging that no one would be made homeless due to the effects of coronavirus. We’ve also launched £150,000 community support funding, as well as setting up regular welfare check phone calls to vulnerable people.
“Despite these turbulent economic times, this confidence from investors really confirms Sovereign’s standing and financial strength, and means that we are ready to hit the ground running as soon as normal business operations resume.”
Stuart Montgomerie, Santander Global Head of Syndicate, said: “We were delighted to help distribute these bonds for Sovereign Housing Association. It was particularly pleasing to price the sale at such a low all-in rate and with no concession to the current trading level. Great credits sell well even when most of us and our investor clients are working from home.”
Barclays Head of UK Corporate DCM, Matt Thomas, added: “Barclays is proud to have led this transaction, supporting Sovereign to access long term financing at a record low yield. The strong demand for this transaction is demonstrative of the strength of the Sovereign business and its leading reputation amongst the Sterling investor base as well as investor support for the sector as a whole.”