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Network Homes has finalised the terms of a £150m private placement from a small group of UK, US and Canadian institutional investors.
The transaction comprises £70m of secured borrowing, plus £80m of unsecured borrowing.
Maturity terms range from 15 years to 30.25 years (weighted average life), including a tranche of unsecured investment with the longest known tenor via private placement in the social housing sector.
Network launched the private placement with £100m on the cover of the transaction but upsized to £150m following strong demand from both UK and North American investors in relation to both secured and unsecured notes, with the orderbook almost three times oversubscribed.
The deal follows Network’s pioneering debut capital markets issuance in January 2019 for £175m, which was the first private placement in the sector that comprised of both secured and unsecured notes on the same transaction.
The 2019 transaction priced with very attractive rates but was comprised exclusively of North American investors due to UK investors being unable to compete on price.
The 2020 transaction had a large UK orderbook and marks significant progress on a journey to generate increased price tension through the inclusion of multiple investor bases, with even better coupons achieved than 2019 despite broader macroeconomic uncertainty and the impact of Covid-19 on credit markets.
The placement was arranged by MUFG and the new funding package will be used to support the delivery of Network Homes’ strategic objective of maximising growth within its resources.
Peter Benz, Executive Director of Finance at Network Homes, said: "The strong and positive engagement we had from investors demonstrates the confidence they have in our business model and governance.
"We have been helpfully guided by MUFG and are proud to have achieved this outcome in the midst of lockdown on both sides of the Atlantic. This new funding will be invested in building thousands of affordable homes for future generations of people who need them and improving the communities for our existing residents."
Anup Dholakia, Director of Treasury at Network Homes added: “I’m extremely pleased with the outcome of this innovative deal which was successfully concluded during unprecedented operational circumstances at the height of the COVID-19 pandemic.
"It represents fantastic value for Network Homes, and builds upon the success of our previous transaction through strong and flexible orderbooks from both investor bases, with pricing comparable to public level issuances."
Ben Eve, Vice President within the EMEA Capital Markets team at MUFG, commented: “Network’s second successful US Private Placement (“US PP”) transaction in two years is testament to the robust credit profile and strong management team.
"The transactions also reflects the depth of MUFG’s institutional knowledge of the sector, which has helped to drive an increase of unsecured funding in the sector in recent years.
"The US PP market continues to provide issuers with this type of increased flexibility as well as that of multiple maturities in the same transaction, and we are delighted to have supported Network’s development ambitions to provide more affordable homes.”