Government guaranteed bond raises £43m for Bromford at all-time low interest rate
It was announced yesterday that Bromford has secured a £43m bond at an interest rate of 2.71% fixed until 2043 - making it the cheapest fix-term borrowing the business has ever secured.
The announcement follows a lengthy application process from Bromford to The Housing Finance Corporation (THFC) under the Affordable Homes Guarantees Programme. The Corporation is a specialist not-for-profit organisation that seeks out money from private investors to loan to housing associations.
Commenting on the result, Alison Cambage, Director of Treasury said: “In the current climate where our income is under threat from changes like the 1% rent cut and SP funding cuts, this £43m, borrowing at our lowest ever interest rate, comes as excellent news.
“The additional money will ensure we can continue to have the flexibility to develop more new homes that help our customers get the most out of life and we can do this outside of the restrictions that grant money and s106 developments can often bring. Also because the interest rates are so low and fixed until 2043 it means that we’re spending a minimum amount on interest repayments, freeing up our money to spend on the stuff that really matters to customers.”
The interest rate was even lower than first anticipated for this latest bond due to continuing movements downwards in long term rates in the money markets. This was significantly lower than the 3.76% seen for the first Affordable Housing Finance (AHF) bond issuance in May 2014.
Commenting to Inside Housing today, Piers Williamson, chief executive of AHF said: “The very low cost of funding has helped deliver a very significant number of badly needed affordable homes.”
This is the latest in a string of positive financial announcements from Bromford. Last December the organisation announced it had secured a sector leading Moody’s Aa3 rating for the third year running.