MORhomes PLC MORhomes' Credit Rating Reaffirmed as A- by S&P (3310H)

TIDM61DP

RNS Number : 3310H

MORhomes PLC

02 December 2020

Press Release

Issued: 2 Decem ber 2020

MORhomes' Credit Rating Reaffirmed as A- by S&P

In line with its regular calendar, S&P Global Ratings (S&P) has conducted its annual review of MORhomes and has reaffirmed MORhomes' credit rating of A-.

While coronavirus remains a hot topic, this reaffirmation is a significant sign of confidence in MORhomes which S&P says " is making progress in building a stronger market share and continues to attract shareholders". S&P highlights the "relative resilience of the U.K. housing sector, the credit risk management that prevents lending to less-creditworthy housing associations, and the different layers of protection in MORhomes such as equity, subordinated debt, and access to standby liquidity facilities.". The rating also comments on MORhomes' strengthening of its management team with the resultant growth in both current loan book and future pipeline. As S&P indicates, "business is expanding and has reached the level of some of the other bond aggregators in the U.K.".

Regarding risk management S&P says " funding policies mitigate interest rate, currency, and asset-liability mismatches, the company assesses its credit risk policies effectively and closely monitors its lending portfolio's asset quality".

MORhomes is still defined as a "start-up" by S&P. S&P's methodology indicates that a "start-up" is generally rated one or two notches lower for a four-year period[1]. MORhomes started trading as a private company in March 2018, was established as a public company in June 2018, and completed its first bond issuance and on-lending in February 2019. S&P states that "the rating continues to be constrained by our view that MORhomes will continue operating as a startup-like entity in the next two years".

Patrick Symington, CEO of MORhomes said: "We are very pleased at this demonstration of confidence that S&P has shown in MORhomes' business. We have shown that in difficult times we have a very relevant funding offer for our Housing Association shareholder / borrowers and look forward to continued steady growth in our business in the year to come".

ENDS

Notes to editors

MORhomes was established in response to the concerns about the capacity of the sterling bond market to fund the needs of housing associations.

Its mission is to support the provision of Social and Affordable Housing in the United Kingdom by acting as a central borrowing vehicle designed to facilitate access to the capital markets by not for profit, registered social housing providers

MORhomes is an initiative created by the housing association sector, for the housing association sector. It allows associations regular access to the capital markets.

MORhomes provides its borrowers with

-- Flexibility to borrow in amounts from GBP10m upwards - saving the cost of having to borrow larger amounts which might be more than is needed at any one time

   --    Quick access to the market, reducing uncertainty over the price of funds 
   --    Flexibility on types of security offered and efficient use of security 
   --    Immediate access to funds with up to a year to put security in place 
   --    Simple documentation and reduced costs and resources in going to the market 
   --    Minimal corporate financial covenants 
   --    Transparent predictable credit process and annual credit limit.

MORhomes is a plc 100% owned and controlled by housing associations. It follows the UK Code of Corporate Governance and aspires to the highest levels of corporate governance and transparency. MORhomes is capitalized by equity and subordinated debt provided by its borrowers, and third-party junior debt. All MORhomes bonds are Social Bonds in accordance with the ICMA Social Bond Principles 2018.

MORhomes' first issue of GBP250m was completed in February 2019 and it has now issued and on-lent GBP408m. Its current borrowers are:

 
 Borrower Name                          Borrower Group Name 
 
  A2Dominion South Ltd                   A2Dominion 
  Aster Communities Ltd                  Aster Group 
  Synergy Housing Ltd                    Aster Group 
  EMH Housing and Regeneration Ltd       EMH 
  Hafod Housing Association Ltd          Hendre 
  Local Space Ltd                        Local Space 
  Melin Homes Ltd                        Melin Homes 
  North Devon Homes                      North Devon Homes 
  Heart of Medway Housing Association    MHS 
  Ltd                                    Pobl 
  Charter Housing Association Ltd        Pobl 
  Tai Gwalia Cyf                         South Yorkshire HA 
  South Yorkshire Housing Association    Wandle 
  Ltd Wandle Housing Association         Thrive Homes 
  Thrive Homes                           Origin 
  Origin Housing Limited                 Eastlight 
  Eastlight Community Homes

For more information please contact:

Andrew Morton

Deputy Chief Executive & CFO, MORhomes PLC

07498 581246

   [1]   See Table 16 in para 107 at https://www.standardandpoors.com/en_US/web/guest/article/-/view/type/HTML/id/2481510

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END

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