03 October 2022
Impact report charts our sustainability journey
We have today (03/10/22) published our first impact report detailing our progress in placing sustainability at the heart of everything we do.
Bromford retains Moody’s A2 and S&P A+ ratings
We've had our sector leading, strong single A credit ratings with both Moody’s and S&P reaffirmed.
In their latest annual reviews announced this week, we have retained our A2 rating with Moody’s and our A+ rating with S&P.
In its report Moody’s said we had a history of strong and consistent financial performance and had strong levels of liquidity going forward, stating: “Bromford’s strong management practices and well-documented procedures have ensured that it has sufficient funding in place to match the funding need outlined in its business plan, which is reflected in its strong liquidity coverage of 1.3x of its net two-year spending.”
Moody’s pointed to how we have navigated challenging economic conditions in the past, giving it confidence on how it will manage the current environment. The report also highlighted our limited exposure to fire safety spending and that all of our properties are fully compliant with current legislation, stating: “Bromford does have a good track record of implementing efficiencies and is relatively insulated from the sector pressures of increased fire safety and decarbonisation costs which will help contain costs.”
The Moody’s rating was also influenced by the fact we only having moderate exposure to market sales in the medium term, stating: “the majority of this exposure relates to first tranche shared ownership for which Bromford has a strong history of performance [3 year average margin of 22%]. Over [the next three years] first tranche shared ownership is expected to account for 10% of turnover on average, with only 3% turnover from outright sales.”
The S&P report points to our investment in its homes and strong focus on sustainability, stating: “We favourably view management's expertise and efforts to balance the current cost pressures by reprofiling and reducing investments in existing and new homes.
“The groups’ strategy continues to place strong emphasis on asset quality and achieving sustainability targets such as energy efficiency and carbon neutrality. This is evidenced in about 86% of its stock already meeting EPC C standards or higher, in line with the key metrics referenced in one of Bromford’s sustainability linked loans.”
And in recent months we have been undergoing a strategic cost review to identify any further efficiencies across the business which will build further headroom into the ratings as increased revenues and savings are delivered.
Our outlook with both agencies remains rated as negative, although this is due to a reflection of the fact that both have the UK on a negative outlook rather than any specific factor relating to the housing association, with the S&P report stating: “The negative outlook reflects the outlook on the UK.”
Director of treasury Imran Mubeen said: “With rising rates, growing inflation, and the confirmation of the rent cap, we have purposefully re-imaged our business plan through a number of iterations over the past six months.
“We have appropriately balanced investment across existing and new homes to support our customers. We will deliver over 11,500 new homes by 2030 and invest over £2bn in existing homes over the life of the plan. We have also included the full weight of net zero carbon costs as we continue with our commitment to sustainability.
“Working through these important developments, we are delighted to have maintained our leading ratings of A+ and A2. We are particularly pleased to see both agencies highlight a number of continuing and new strengths as we have successfully faced into the challenges in front of us. The ratings are a testimony to the great work of all of our colleagues do every day in ensuring the current and future viability of the organisation.
“Ultimately, maintaining our strong credit rating platform is fundamental to delivering our new funding programme so we can invest in existing and new homes to enable our customers to thrive. The journey continues later this year as we return to the capital markets and bring in additional revolving credit facilities, with all of our new funding linked to our sustainability framework.
“As we continue to work through the challenges ahead, we will not be complacent and we will continue to proactively plan to anticipate and accommodate change.”
