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Pension first for Monmouthshire Housing Association in £85m refinancing deal

Monmouthshire Housing Association (MHA) has struck an £85m deal to refinance its entire loan portfolio, securing £65m from the Pension Protection Fund (PPF) in its first direct investment into the UK social housing sector.

The PPF’s funding is for 40 years and sits alongside £20m of flexible finance provided by existing lender Barclays.

The funding package, delivered with advice from Savills Financial Consultants, allows MHA to release significant financial capacity, giving a substantial boost to its ambitious development programme.

The deal – which has attracted one of the lowest all-in interest rates through a private placement for a UK housing association in the past 12 months – also supports the delivery of MHA’s wider Environmental, Social and Governance (ESG) aims. As well as increasing affordable housing provision, it is committed to a range of ESG targets – including cutting carbon by a further 10% by 2024 and helping 30 tenants into work each year. The PPF and Barclays are both keen to support these important goals as part of their own responsible investment priorities.

The PPF is a ‘lifeboat’ scheme set up by the government in 2005 to protect members of defined benefit pension schemes that become insolvent.

John Keegan, chief executive of MHA, said: ‘We are delighted to have concluded this important deal with our funding partners to support our delivery for tenants. It is especially pleasing to be working with the Pension Protection Fund on its first direct placement in the UK social housing sector.

‘The new funding has simplified our legacy treasury portfolio and we are grateful to Barclays for its continued support as our long-standing partner. The new structure provides increased capacity and liquidity, along with improved covenants, giving us a strong platform on which to deliver our corporate plan and bold growth ambitions.”

Barry Kenneth, the PPF’s chief investment officer, said:  ‘We see strong alignment between this investment and our Responsible Investment strategy in creating positive social and environmental outcomes. We’re pleased that our investment will support MHA’s continued focus on providing affordable housing to meet the growing needs of its local community, alongside the wider environmental and social benefits of this program.’

Alex Morgan, Director at Savills Financial Consultants, said: ‘This very successful transaction has been delivered through a period of significant economic and political volatility. We are very pleased to have been able to support MHA in delivering a complete refinancing of its loan book, and in introducing the PPF to the housing sector for its first direct deal.’


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