Government guaranteed bond raises £27m at ‘record low’ interest rate
Bromford has secured a £27m drawdown at a new ‘record low’ of 1.82%, the government aggregator Affordable Housing Finance (AHF) has announced.
The funding has been provided by the European Investment Bank (EIB) and has been finalised at 0.12% below the gilt rate – the cost of equivalent government borrowing – meaning Bromford is effectively borrowing at a better rate than the UK government. As a non-profit bank, the EIB sources funding from international debt markets and passes on low rates to its borrowers.
Commenting on the result, Alison Cambage, Bromford’s director of treasury, said:
In the current climate where our income is under threat from changes like the 1% rent cut, borrowing at the lowest fixed rate we’ve ever managed to secure comes as fantastic news. These rates are truly remarkable. This additional money has strengthened our plans for new homes and projects over the next five years and as we start paying it back after 10 years, it allows us to free up more funds to spend on the stuff that really matters to customers in the here and now.
Piers Williamson, AHF’s chief executive, said to Social Housing magazine:
Bromford timed this deal extremely well – it comes on the day The Times reported that ‘borrowing costs are at their lowest ‘since [the] Bronze Age’. Such cost-effective funding will support Bromford in continuing its excellent work providing much needed quality affordable homes.
This latest success comes after Bromford secured a £43m bond in March at a fixed interest rate of 2.71% until 2043 – the cheapest fixed-term borrowing the business had ever secured at the time. You can read more here.