Paradigm returns to the capital markets with a £250m sustainability bond to fund their investment in new homes

Posted on the 28th March 2024

Paradigm Housing Group has this week issued a £250m sustainability bond to support its ambition to invest in good quality, safe and energy efficient homes in the south-east of England.
 
The funding marks a return to the capital markets following Paradigm’s debut in 2021.  The bond aligns with the housing association’s Sustainability Finance Framework, which embeds environmental, social and governance (ESG) factors into its strategy.  Paradigm, a not-for-profit registered provider of social housing, is one of the leading providers of affordable housing in the South East, managing nearly 17,000 homes.

Over the last 35 years, Paradigm – a housing association formed through the very first large scale voluntary transfer of homes from Chiltern DC to Chiltern Hundreds HA – has become one of the largest social housing providers in the counties of Buckinghamshire, Hertfordshire and Bedfordshire.

A central part of Paradigm’s vision is to build much-needed affordable housing to help more people, while investing in safe and sustainable homes.

Issuing another sustainability bond under Paradigm’s framework reinforces Paradigm’s commitment to becoming a net zero carbon business by 2050, in line with the objectives set out in its Corporate Plan 2021-26.

Paradigm priced the bond on Tuesday (26 of March 2024) at a coupon of 5.250%, with £150m of bonds sold to investors in the first instance, and £100m of the proceeds retained for later sale, as and when the group requires the further funding.

The £150m of bonds were priced at a spread of 87 basis points – or a margin of 0.87% – over the government cost of borrowing, known as gilts. That resulted in an all-in cost of 5.295%.

The transaction attracted strong engagement from investors, with the bonds being more than three times oversubscribed and investors placing £520m worth of orders at close.  Investors were attracted to Paradigm’s consistently strong credit and regulatory ratings, robust operating margins, core focus on social housing and experienced senior management team.

Nicola Ewen, Chief Finance Officer: “We are pleased to have returned to the capital markets with our second bond.  The feedback we received from investors reinforces our financial strength, strong management and our commitment to building and investing in safe and sustainable homes in our operating area.”

Matthew Bailes, Chief Executive at Paradigm, said: “The feedback we got from investors and the margin we achieved reflected the strength of the business and the grip we have on efficiency, risk, development and operational delivery.”

The bond supports Paradigm to deliver on its main objectives set out in their corporate plan, such as providing new homes focused in their core operating areas of Buckinghamshire, Bedfordshire, Hertfordshire and eastern parts of Oxfordshire.

Paradigm will publish an annual report disclosing the use of bond proceeds, which will be made available on the group’s website.

Paradigm is awarded an A+ credit rating, with a stable outlook, by Standard & Poor’s (S&P). An A+ rating is one of the stronger ratings in the HA sector, with S&P observing in their last update that it “reflects their expectation that Paradigm’s management will prudently execute its business plan while keeping enough headroom to mitigate any undue pressures”.

S&P also remarked on the group’s strong liquidity and robust operating margins, with financial performance expected to remain solid despite the commitments to increase investments in the energy efficiency of the group’s existing homes.

Bookrunners on the bond were Barclays and Lloyds.

Centrus acted as financial advisors, with Trowers as legal advisors to Paradigm, Pinsent Masons providing legal advice to the joint bookrunners and JLL conducting the valuation.

Lawrence Gill, Director at Centrus said: “It was a pleasure working with Paradigm on both their first and second bond issuance – Centrus is committed to sustainability and we’re thrilled to support Paradigm by aligning its financing with net-zero targets and wider corporate strategy”.

ENDS

Notes to editors:

Paradigm Housing Group is one of the leading providers of affordable housing in the South East, managing nearly 17,000 homes. Our vision is to provide excellent services to customers and build new homes to help more people. We make sure our homes are safe and sustainable and strive to do more, by making the most of our resources.

We have grown over the last 35 years to become one of the largest social housing providers in the counties of Buckinghamshire, Hertfordshire and Bedfordshire.

For further information and interview opportunities, please contact Anne Michael, Communications Manager at Paradigm on 01628 811874 or via Anne.Michael@ParadigmHousing.co.uk

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