An affordable housing aggregator has had its credit rating upgraded to A+ with a stable outlook, following an annual review by S&P Global.

The Housing Finance Corporation’s (THFC) upgrade from A to A+ applies to THFC Group, THFC Sustainable Finance and THFC’s three funding vehicles, T.H.F.C Funding No. 1, T.H.F.C Funding No. 2 and T.H.F.C Funding No. 3.

S&P said the stable outlook reflected its expectation that THFC’s position as the UK’s leading social housing aggregator and its low-risk environment will offset pressure coming from strong competition, such as banks and own-name placements by social housing providers.

S&P also commended THFC’s prudent risk management policies, diversified pool of borrowers, and robust funding and liquidity ratios.

The upgrade follows a decision by S&P to review its approach to organisations it categorises as public sector funding agencies (PSFA methodology), where it is more closely linking the analysis of PSFAs to the credit risks of the underlying sector.

Overall, S&P said there is a low level of risk associated with THFC’s lending portfolio, supported by sovereign guarantees against more than 40% of its loan book.

Priya Nair, THFC CEO, said: “This rating upgrade is strong evidence that, despite the challenges housing associations face, the sector continues to be seen as financially robust.  Having recently achieved the strongest set of financial results in THFC’s 37-year history, it’s encouraging to receive external validation for our strength and stability at a time when all eyes are on funding solutions and partners that can support the sector’s priority of investing in good quality existing and new homes”

This S&P upgrade comes as bLEND Funding plc (bLEND), a wholly-owned subsidiary of THFC, maintained its stable long-term A2 credit rating from Moody’s.

Moody’s said bLEND’s credit quality was a result of strong management of its pool of 32 housing association borrowers, along with the strong credit quality of the HAs and the liquidity feature that the bLEND platform offers.

Ms Nair added: “The UK social housing sector continues to navigate a significant period of change and competing pressures.

“However, the new government has offered some positive policy changes for social housing, and we at THFC and bLEND stand ready to provide the support and type of debt funding the sector needs to build and improve homes and help create sustainable communities across the UK.”

The updated S&P credit opinion can be downloaded here, and the Moody’s credit opinion can be downloaded here.