Metropolitan Thames Valley Housing (MTVH) became the latest housing association to raise funds through a sustainability bond, pocketing £ 250million to help build energy efficient homes and renovate existing stock.
The owner of 58,000 homes has secured the 15-year bond at a nominal interest rate of 1.875% and a spread on gilts of 115 basis points (bps), valued through its new European medium-term note program (EMTN). The overall cost of funds was 1.999%.
This is part of MTVH’s goal of building 6,000 new energy efficient homes over the next five years at an estimated total cost of £ 2.1 billion.
MTVH joins the other owners of the G15, Clarion and Notting Hill Genesis, as well as Paradigm and Aster Group, who have raised funds in the bond markets based on their sustainability credentials.
For its financing agreement, MTVH pledged that all new homes will have at least an Energy Performance Certificate (EPC) of B. Its existing homes will also be EPC C by 2030, in line with the broader requirements of the sector and linked to the government’s net zero targets.
The measures are spelled out in MTVH’s new sustainable funding framework, which also helped it secure funding.
Of the new homes, 80% will be affordable rent or condominiums, the owner said.
Like its peers, MTVH faces significant costs linked to the decarbonisation of its fleet, while for the owners of the G15 in particular, fire safety work requires significant investments.
Earlier this month, MTVH became the third owner of the G15 to receive the Certified Sustainable Housing Label, a pan-European initiative operated by the German consultancy firm Ritterwald aimed at attracting investors avid for the environment, society and the environment. governance (ESG).
Owners are assessed on more than 30 criteria based on the United Nations Sustainable Development Goals.
MTVH has already sought funding on the basis of its green program. Last December, it took out a £ 50 million loan from French bank BNP Paribas, the interest rate of which is tied to environmental targets.
The London-based owner was also one of the first to adopt the industry’s first sustainability reporting standard, aimed at introducing consistency in how owners report their ESG performance.
Commenting on the new bond issue, Geeta Nanda, Managing Director of MTVH, said: “Our commitment to sustainability in how we build the new homes that the country so desperately needs has been really well received by investors.
“We have a strong history across the entire ESG program, but with this new resource we can do even more.
Earlier this week, MTVH also received a long-term issuer default rating of “A” from Fitch Ratings. The owner’s outlook was rated as “stable”.
According to Fitch, MTVH aims to build 13,700 new homes over the next 10 years, which will cost £ 4.7 billion.