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A2D Funding II raises GBP150m from recent bond issuance

A2D Funding II plc has raised GBP150m via its recent issuance of AA-rated retail-eligible bonds.

The 4.50 per cent unsecured sterling bonds, due 2026, are guaranteed by A2Dominion Housing Group, one of the largest social housing providers in London and the south east of England.
 
The proceeds of the issue will be lent to members of the A2Dominion Group, which comprises A2Dominion and its subsidiaries.  
 
Cash from the bond issue, which closed after one day due to high demand, will be used to fund A2Dominion’s development programme and further grow its portfolio, which includes social housing, private sale and rent, shared ownership and student accommodation.
 
Canaccord Genuity and Lloyds Bank plc acted as joint lead managers on the transaction.
 
Dean Tufts, A2Dominion’s executive director (finance and strategy), says: “This second retail bond issue is a continuation of our strategy to maximise long-term funding opportunities and diversify our sources of funding that can be utilised anywhere within the A2Dominion Group. The bond issue will support the provision of high-quality housing services and allow us to further invest in both affordable homes and housing to be let or sold on the open market.”
 
Adrian Bell, head of debt markets UK at Canaccord Genuity, says: “This is A2Dominion’s second unsecured issue in the bond market. Carried out on tighter pricing, with a longer maturity, the strong demand it has received from both retail and institutional investors attests to the quality of the credit and widespread appetite for unsecured housing association debt.”
 
Raj Jayaprakash, associate director at Lloyds Bank, says: “The success of A2Dominion’s second retail eligible bond highlights the strength of demand from both retail and institutional investors, with a good mix between existing investors and those that were new to the sector. This transaction also breaks new ground in terms of maturity of 12 years, the longest ever in the retail bond market.”   
 
A2Dominion has been rated AA- (Outlook Negative) by Fitch Ratings. Fitch has also assigned the bonds an expected long-term local currency rating of AA- (Outlook Negative).
 
A2Dominion operates across 80 local authority areas in London and South East England, as owner or manager of around 34,800 homes, and has approximately a further 4,600 homes in development.    

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