RBC sells UK housing sector bond
Canadian bank RBC Capital Markets has sold a 30-year bond for Affinity Sutton Group, the UK affordable housing developer, marking the first large transaction from the industry sector since the turmoil in the credit markets first erupted more than a year ago.
The £250m (€313m) fixed-rate, secured bond – reportedly the largest ever own-name bond issue from the sector – was priced yesterday by RBC on an orderbook that it said was oversubscribed. An own-name bond is one sold by the company itself rather than any of its subsidiaries. The bonds have been placed with 17 institutional investors.
RBC said the deal is the first major new issue from the Registered Social Landlord sector since July last year, and highlights that the bond markets can still offer liquidity to companies seeking finance to support the development of new affordable housing.
Institutional investors have largely shunned bonds backed by real-estate assets and even just plain vanilla, senior bonds from the companies in the real estate sector in the last year as a result of the turmoil sparked by the sub-prime mortgage crisis in the US. However, there appears to be investor demand for certain sectors of the real estate market. Phil Jenkins, a director in the global infrastructure team at RBC Capital Markets, said the deal demonstrates the credit fundamentals and maturity of the company and the RSL sector. He added: “The orderbook for this deal is as strong as we have seen for some time in any sector, confirming that the sterling bond market is open to high quality RSL borrowers.” Affinity Sutton is rated high in investment grade at Aa2 by Moody’s Investor Service.
--write to dkerr@efinancialnews.com
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