Standard & Poor's affirms our rating as ‘A+’ and stable
We are pleased to report that credit agency, Standard and Poor’s Global Ratings (S&P) have affirmed their rating of our company at A+, and our outlook as stable.
The S&P report noted our robust overall business plan, strong management team and our management of risk. It also highlighted that the geographical areas we have chosen to expand into, benefit from a strong housing market. Our key decision to focus on the dynamic wider housing areas in the East of England has translated into high demand for housing and low vacancy rates for our properties.
The report recognised that we have responded positively to welfare reform, and acknowledged our strong and proactive approach to the roll-out of Universal Credit.
S&P also stated that our choice of shared ownership and our strong sales performance in this area mitigate many of the risks of non-traditional activities increasingly being embarked upon by other housing associations.
The report states: “The ratings on Cross Keys Homes Ltd. benefit from high housing demand in the company's areas of operation, its high margins, and its controlled debt…We are therefore affirming our 'A+' long-term rating on CKH. The stable outlook reflects our expectation that CKH will maintain strong profitability and increase debt only modestly over the next two years, by not exceeding the level of exposure to non-traditional activities that we currently anticipate in our base case.”
Claire Higgins, Chief Executive, said: “It really is fantastic news that S&P have affirmed their rating of us. It is testament to the hard work of my team in driving efficiencies across the company, as well as being aware of, and reacting quickly to, risk. What is most thrilling is that we are still able to continue to increase our development programme and so deliver the homes that are so desperately needed across the region. Despite the challenges we continue to face I am confident that we can keep building homes and still deliver the excellent services our tenants and customers expect and need.”
CKH’s rating outlook improves, leading to successful sale of bonds
We are very pleased to report that credit agency, Standard and Poor’s (S&P) have favourably revised their outlook of the financial position of our business to stable, and have affirmed their rating at AA-.
The report from the world wide credit rating agency determined that we had reacted well to both the cuts in rental income and new operating environment. We have scaled back our development programme slightly and this resulted in our new business plan being viewed by S&P as more prudent.
The report states: “In our view, U.K. social housing provider Cross Keys Homes Ltd. benefits from a very strong enterprise profile, a strong financial profile… we now view positively Cross Keys’ recent strategy review in favour of a less aggressive capital program and we also anticipate stronger financial performance by fiscal year-end 2019. We are therefore revising our outlook on Cross Keys Homes to stable from negative and affirming our 'AA-' rating.”
Alongside this decision by Standard and Poor’s, we have been able to secure the successful sale of a £45 million bond issue through our treasury financing company, Cambridgeshire Housing Capital plc.
The bond offer was 250% over-subscribed by investors, which demonstrates investor confidence in our long-term future. The spread above Gilt was 1.39% with a yield of 3.705%. The Lead Arranger and Bookrunner on the bond was Lloyds Bank.
Claire Higgins, our Chief Executive, said: “It really is positive news that S&P have improved their view of our financial position. It is testament to the hard work of my team in driving efficiencies across the company. It was a difficult decision to cut back slightly on our development programme at a time when there is a huge housing crisis facing the country. The securing of our bond is proof that we have made the right decisions and we are now in a very strong position to continue to deliver on our ambitions. We are still building more homes than ever before, and I am confident we can keep doing this and more whilst still delivering the excellent services our tenants and stakeholders expect.”
Cross Keys Homes issues housing sector's first 'green' bond
In September 2014 Cross Keys Homes announced the successful pricing of a £150 million bond issue (including £45 million retained bonds) through its treasury financing company, Cambridgeshire Housing Capital plc.
The bond carries a coupon of 4.250% and has a maturity of 31 years, and was priced at a semi-annual yield of 4.297%, which equated to a spread of 1.20% over the benchmark gilt at the time of pricing.
The bond also carries an Environmental, Social and Governance (“ESG”) accreditation, believed to be the first time a housing association bond has carried such an accreditation.
Part of the bond proceeds will be used to develop around 250 new homes per annum and also an early repayment of £55 million of existing bank debt - part of a wider re-structuring of Cross Keys Homes’ existing banking facilities designed to deliver increased funding flexibility to support future growth plans.
As part of this work we secured a AA- rating through Standard & Poors. The money will be raised through a subsidiary with a clear Cambridgeshire connection and show our aspirations to develop new homes in other parts of Cambridgeshire as well as Peterborough.
Cross Keys Homes has also been allocated £1.3 million, by the Homes and Communities Agency (HCA) to deliver homes as part of the Affordable Homes Programme 2015-2018.
This will enable us to build a total of 194 new homes over the next three years with grant funding support from the HCA and follows on from the expected delivery of over 800 new homes under the existing programme between 2011-15.
See the press release here
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