28 June 2023
Bromford secures new £75m sustainability-linked loan with international funder
Leading regional housing association Bromford has today announced a £75m five-year sustainability-linked revolving credit facility with an overseas…
S&P upgrades Bromford’s outlook and underlying credit strength amidst sector downgrades
We have had our outlook upgraded to stable from negative by S&P Global Ratings.
The global ratings agency reaffirmed our A+ rating, but importantly upgraded the strength of our underlying credit profile which has been lifted up one level from a to a+ for the first time since the rating was established over five years ago.
The change means that our credit rating will, for the first time, stand up in its own right as A+ (stable) without the usual one-notch uplift that ratings receive from the government’s performance. And we will therefore be insulated from any future deterioration in the nation’s rating.
Our enhanced rating follows a number of downward rating actions by S&P and Moody’s over recent months. S&P have reviewed our2023 business plan, which continues to pursue 12,000 new energy efficient homes by 2031, and over £2bn of investment in existing homes including the full weight of net zero carbon costs.
The agency confirmed that they “have positively reassessed Bromford's strategic planning and management. [S&P Global Ratings] think that management's actions have supported solid credit indicators, notably amid sector challenges. In particular, Bromford has demonstrated an ability to generate cost efficiencies under a strategic review program, which will bolster its performance.” The agency goes on to say the 46,000-home social landlord will be able to “prudently execute its business plan and manage costs, while keeping enough financial headroom to mitigate current operating challenges.”
The report published today by S&P also cites strong levels of liquidity and ready access to the banking and capital markets, before concluding: “The outlook revision reflects our view of Bromford’s strengthened intrinsic credit quality. We think that management’s sound ability to deliver cost efficiencies will help balance pressure from inflation, high investment needs in existing assets and tighter funding conditions. This should support the strengthening of the group’s EBITDA, in turn improving the group’s financial headroom. These developments supported a stronger stand-alone credit profile.”
Director of treasury Imran Mubeen said:
As the rent cap continues to meet with stubborn levels of inflation, and as interest rates continue to rise, we continue to place treasury analysis at the beating heart of business planning and corporate strategy. It means we own our credit ratings rather than being held hostage to them, with every pound of funding and new investment purposefully curated in our plan to arrive within safe harbour lines to maintain our A+ and A2 ratings. With all of the headwinds we are facing into, it is becoming more difficult but with purposeful planning it is still within reach. When we get this right, rather than restricting future investment, credit ratings help to identify new opportunities to unlock balance sheet capacity – and in our case, it enables us to deliver over £2bn of investment into our existing homes and complete 12,000 new homes whilst maintaining the financial discipline to ensure we can raise £1bn of new funding in difficult markets.
We are pleased that S&P have recognised the strength of our business plan, the quality of our homes and the operational efficiencies we have driven without compromising service delivery or customer experience. Standing up as an A+ rated organisation without relying on any uplift from government support is an obvious strength as the UK economy remains challenging and as we approach a new political cycle.
We are now stepping into our new corporate strategy, with its focus on place, scale and impact. As we continue to invest in homes and relationships so our people can thrive, there is no firmer foundation for delivery than our sector leading dual credit platform.
Our upgraded rating follows another year of strong financial results presented in its trading update for the year ended 31 March 2023, its recent entry into a new £75m sustainability linked loan with ABN AMRO, and the publication of its 2023 sustainable finance framework linked to seven UN Sustainable Development Goals and committing delivery across a range of ESG projects.
