Housing association Aster Group has priced its first £250m Sustainability Bond under the group’s new European Medium-Term Notes (EMTN) programme with the proceeds bolstering its fund for developing new affordable housing.
The 15-year bond, which was four times oversubscribed, comprised £200m immediate funding and a further £50m retained. It priced at a spread of Gilts 80bps, with an all-in cost of 1.4%. It attracted investors that have not previously invested in Aster.
The group, which holds an A+ (stable) credit rating from Standard & Poor’s, said the bond would be used to fund the construction of new energy efficient homes for affordable and social rent and shared ownership.
Aster owns and manages over 30,000 homes across the south of England. It is investing over £2bn over seven years in new homes.
Chris Benn, group finance director at Aster Group, said: “Investors are increasingly seeking to fund businesses that operate in an ethical way and help to build a better society. This bond gives us further funding for our green affordable programme, so we can provide more of the homes required to meet the UK’s housing need – particularly in our south of England heartland, one of the most expensive housing markets in Britain.
“We’re very pleased to secure such competitive pricing and attract new investors to Aster to support our drive to be a more sustainable business. The bond proceeds complement our funding from other sources that together make up our diversified and prudent funding strategy.”
Lloyds Bank and Barclays acted as bookrunners on the bond placement.
Kirsty Garrett, Director in Lloyds Bank’s Debt Capital Markets team, said: “The Lloyds team was delighted to work with Aster to successfully issue its debut sustainability bond, off the newly established EMTN programme. The investor engagement throughout the roadshow and execution phase is a testament to the quality of the Aster management team.
“The transaction welcomed a number of new investors, attracted by Aster’s credit strength and clear ESG focus at its core. The deal marks only the third ever Sustainability Bond issued by a housing association and paves the way for more to follow. With a diverse, growing investor base and its EMTN Programme, Aster is well-positioned to efficiently return to the bond markets in the future”
Matt Thomas, Head of UK Corporate DCM at Barclays, added: “Barclays is proud to have supported Aster on an incredibly successful return to the capital markets. Investors fully embraced Aster’s sustainable finance strategy and recognised and rewarded the leadership shown. The transaction, priced off a newly established EMTN Programme and Framework for Sustainable Finance, delivers not only a strong initial pricing and demand outcome but also ensures Aster has established a sustainable issuance platform for the future.”
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