Posted on 06 August 2020
Hyde is pleased to announce the issuance of a 35 year, £400m bond, which includes a £50m retained element, at a coupon of 1.75% and issuance credit spread of 130 basis points over gilts.
The coupon of 1.75% is one of the lowest rates ever achieved in the long-dated sterling bond market in the sector and demonstrates the continuing strength of support Hyde enjoys from institutional investors. The bond was launched with initial pricing guidance of 145 basis points, but exceptional demand from investors helped the lead banks on the transaction, Barclays, HSBC and NatWest Markets, to lower this to a final pricing level of 130 basis points.
Investors in the £400m bond included some of the largest UK and international institutional investors and asset managers, with a final order book that was nearly three times oversubscribed.
The issuance was made to refinance other long-term facilities, which will significantly reduce overall interest payable going forward and therefore strengthen interest cover and credit rating metrics on a long-term basis.
The £50m retained portion of the bonds issued may be used for further refinancing and/or investment requirements as appropriate.
We last issued a bond in 2017 through our subsidiary, Martlet Homes, where we raised £400m for 35 years at 3.0%, and this new bond complements the existing Hyde £200m 30-year bond issued in 2010.
Standard & Poor’s has assigned an A (stable) credit rating to the bonds, which was based on Hyde’s annual rating review as updated on 24 July 2020 and affirmed as unchanged. Fitch has also assigned an A+ (negative) rating to the bond.
Rod Holdsworth, Chief Financial & Resources Officer, said: “This is an excellent outcome for Hyde and I would like to thank everyone involved. The savings we will make on interest payments put us in a great position to deliver on the aspirations we set out in our strategic plan 2050 and ultimately, to build more homes for people who need them.”
EY supported Hyde as its independent financial advisors on the deal, which took place under an accelerated timeline of eight weeks. Commenting on the transaction, Luke Reeve, Partner in Debt Advisory at EY, said: “It was great to see the sterling market be so supportive of both the social housing sector and specifically the Hyde credit story during the traditionally quieter summer holiday season - a fantastic order book and transaction management from Hyde’s Treasury team and the lead banks to deliver this outcome”.
Barclays, HSBC and NatWest Markets acted as joint lead managers on the transaction and supported us with the investor presentation, documentation, and investor roadshow which took place over one day via teleconference.
Devonshires supported us on the documentation and Trowers & Hamlins on the securitisation process. Julian Barker, Head of Banking and Capital Markets at Devonshires commented: “We are delighted to have supported Hyde on another highly successful transaction, which was completed in extremely tight timescales, in order to allow them to access the sterling bond market at an optimum time.”
The charging through Trowers also took place on an accelerated timescale, where £377m of collateral was prepared in just eight weeks. Katie Dyer from Trowers commented: “We were delighted to have worked on security aspects of this deal. It was clear from the outset that all parties involved were invested in meeting the very tight timescales required and this enabled the project to run smoothly throughout and to take advantage of the once-in-a-lifetime rates that are on offer at the moment. We are extremely proud of the smooth security process, thanks to our great team work with Hyde and their excellent responsiveness.”