Bromford retains A2 stable credit rating from Moody’s
We've had our A2 credit rating with a leading credit agency reaffirmed.
Moody’s highlighted our “strong and consistent financial management,” “risk-averse investment and debt management” and “ample liquidity” as it made its decision to maintain our A2 stable rating.
In its report Moody’s said: “In contrast to much of the rated sector, Bromford has maintained and in fact marginally improved its operating margin over the past five years, despite the rent cut, disruption posed by the COVID pandemic, increased building safety costs and high inflation over the past two years. The median operating margin for all rated housing associations has declined from 29% to 22% from fiscal 2019 to fiscal 2023, and the same decline was seen for A2-rated housing associations, whereas Bromford's margin has improved from 30% to 31% over the same period.”
“Contributory factors to its strong operating margin include: effective control of its cost base through in-house repairs and maintenance services, disposals of uneconomic stock, decent margins achieved on its market sales tenures, very limited fire safety works required due to the characteristic of its housing stock and cost efficiencies implemented after its merger with Merlin in 2018.”
The retention of its A2 stable rating follows the decision in July from fellow ratings provider S&P to revise our outlook from negative to A+ stable and delink the group’s rating from the UK sovereign.
Our director of treasury Imran Mubeen said: “We are very pleased to have our strong A2 stable rating with Moody’s reaffirmed after what has been another challenging year for the housing sector in the face of high inflation, rising interest rates and the impact of the rent cap. Together with our A+ rating with S&P and our G1/V1 status with the Regulator of Social Housing, it demonstrates the financial and operational strength of our organisation as we pursue our 2023 – 2027 corporate strategy.
“Maintaining our sector-leading credit ratings has been instrumental in enabling us to deliver £150m of new capital markets funding and over £225m in new revolving credit facilities during the past 12 months. And they will allow us to pursue further funding over the years ahead as we seek a further £1bn of new funding to build 12,000 new affordable and energy efficient homes by 2031, reduce our carbon emissions, and deliver our broader sustainability objectives.
“We will never be complacent with our credit ratings, and continue to arrive at A2 / A+ position by design and intention. We run shadow credit analysis on all iterations of our business plan to ensure we maintain headroom above our safe harbour limits for our key metrics. The economic climate and broader sector challenges mean that the equations we are solving are now tighter than ever – but with pro-active planning, we can ensure we run an operating model which enables our customers to thrive, underpinned by a strong financial platform that remains attractive to the investor community.
“Our credit ratings are a key measure of our financial resilience and our capacity for new investment and growth, but we believe they should always be provided in full view of how we are delivering for our customers. It is also incumbent upon us to explain our business plan and treasury strategy to our customers. We were therefore delighted to introduce a dedicated customer workshop as part this year’s annual review with Moody’s so the agency could learn more from our customers about the day to day challenges they face and how they experience their home and the broader services we offer. Moving forwards, we will no longer accept a credit rating update from the agencies unless they meet with our customers as part of the annual review process.”
