To issue or not to issue

Phil Elvy, Executive Director of Finance at Great Places Housing Group, reflects on a challenging but successful period for treasury teams in the sector, and highlights the main issues to review and consider when thinking about issuing.

Congratulations to treasury colleagues across the sector who have locked in some fantastic deals in recent weeks, despite the continuing challenges brought about by the coronavirus crisis. These all go to prove that the social housing sector is incredibly resilient and financially strong, proving still to be very attractive to investors.

With a £70m retained bond, I am constantly asking myself the question “when is the right time?” Of course, if I knew the answer to that I would win the lottery every week.

The coronavirus crisis follows a year that was dominated by Brexit-driven uncertainty, and it seemed that almost fortnightly I was approached by any of a range of funders telling me that there would never be a better time to issue the retained bond than now. Of course every time we didn’t issue, the deal two weeks later was even more attractive.

There are numerous things to keep under review – balancing the certainty of cash in the bank at historically brilliant rates, liquidity requirements, the cost of carry, security efficiency, potential for a deferred issue and many other factors.

There is so much more to the decision than just achieving the lowest spread or the best headline all-in rate. We continue (in Boris Johnson’s words) to stay alert to the market circumstances as well as considering the best timing for Great Places.

Just to illustrate how difficult it all is – surely the market can’t be much more favourable than it is now? And then the email arrives suggesting we could lock in negative rates for up to 10 years… Who’d be a treasurer?

Who to speak to

Lawrence Morris, Policy Officer