Housing association raised £140m from small investors
One of the UK’s largest housing associations has become the first to raise cash from ordinary savers.
Places for People will make £140m from its retail bond issue, which is aimed at small investors.
The organisation will raise £90m more than it originally intended because there was strong demand from investors for the bond.
Places for People has issued bonds on the corporate market for a decade but this is the first time any housing association has used a retail bond which is designed for small investors.
The bonds have a maturity of six months to five years unlike the corporate bonds usually used by housing associations which have longer maturities. Places for People expects the bond to be rated Aa3 by Moody’s Investors Service. The bonds will be traded on London Stock Exchanges market for retail eligible bonds (ORB) and are designed to be eligible for ISAs and SIPPs. The bond will be issued on 27 June and will pay 5% interest per year until December 2016.
Steve Binks, group finance director at Places for People said: “We’re delighted at the levels raised and the extent of over-subscription. We believe the success of the bond marks an important move towards a more creative and innovative financing structure for the housing association sector. It shows that there is a strong appetite for individualinvestment in a sector which has a good credit rating, stable cash flows, and strong financial viability.”
Pietro Poletto, head of fixed income at London Stock Exchange Group, said: “The listing of Places for People’s bond gives private investors simple, transparent access to a completely new kind of issuer on the ORB, and allows them to support an organisation doing vital work in communities across the UK. We are delighted to welcome them to our market, and look forward to facilitating further issuance from an increasingly broad range of issuers in the future.”