The National Housing Finance and Investment Corporation (NHFIC) has today finalised $462 million of social bonds taking total issuance to approximately $2 billion since the organisation was established three years ago.
The new 10-year social bonds include a fixed-rate note of $362 million and NHFIC's first floating-rate note of $100 million. The social bonds were more than two times oversubscribed and continue to build NHFIC’s investor base with 28 investors taking up the fixed-rate bond and 15 investors in the floating-rate note. Both local and offshore investors participated.
The latest social bonds follow NHFIC’s raising of $343 million last month with its first 15-year sustainability bond.
Funds from NHFIC’s $362 million fixed rate bond will finance 10-year fixed rate interest only loans to eight community housing providers (CHPs) including SGCH Group, Mission Australia, Unison, Common Equity VIC, Foundation, Pacific Link, HCA SA and HCT supporting more than 1,000 new and over 2,800 existing homes in NSW, Victoria, Tasmania, Western Australia and South Australia. NHFIC will also finance a 10-year variable interest loan to SGCH Group with the proceeds of the $100 million floating rate note.
In total, the bond is anticipated to save the participating CHPs almost $100 million in interest payments over the next 10 years.
Total savings for participating CHP’s from NHFIC bonds to date exceed $420 million, which the CHPs can use to provide important wrap around services and more social and affordable housing.
NHFIC CEO Nathan Dal Bon said the organisation had become an established issuer in the bond market and had expanded its offerings to both investors and the community housing sector though last month’s sustainability bond and now its first floating-rate note.
“Investors have taken up more than $800 million of NHFIC bonds within two weeks, with this strong support seeing institutional and private capital flowing into subsidised housing,” Mr Dal Bon said.
“This bond will show the tightest margin relative to Commonwealth Government bonds that NHFIC has issued so far,” he said.
Sydney-based community housing provider SGCH Group received the largest loans from the bond and floating rate note at $250 million.
SGCH Group CEO Scott Langford said: “Building on the strength of our partnership with NHFIC we are delighted to innovate with this floating rate note. This allows us to match the financing and service arrangements to access long-term, efficient finance. With the ongoing backing of NHFIC and institutional investors, we have now mobilised $475 million and are on track to deliver 1000 homes in 1000 days.”
George Bishay, portfolio manager for bond investor Pendal Group said: “It is gratifying to see our NHFIC investments put a roof over the heads of people in need, while also bringing strong returns to our clients.”
“Our clients love to hear stories from CHPs about real-world mums, dads and underprivileged Australians benefiting from NHFIC-funded affordable and social housing,” Mr Bishay said.
Nick Kalisperis Executive Director at UBS said: “This not only marks NHFIC's fifth transaction since its debut in March 2019, but includes a new product in a floating rate note. This is a testament to NHFIC's ongoing journey in becoming a frequent issuer in the Australian capital markets".
Deutsche Bank Head of Debt Syndicate – Australia, Craig Johnston said: “We were delighted to help NHFIC on their two recent social bond issuances, which attracted strong demand and a positive reception from the investor community.”
Westpac Financial Markets associate director Jack Geddes said: “NHFIC has continued to lead the evolution of Australia’s GSS market with the issue of a new 15-year sustainability bond and 10-year social bond. Investors have an increasing demand for green and social assets and we saw outsized interest from key investors in this transaction relative to vanilla bond issues.”
Community Housing Industry Association (CHIA) CEO, Wendy Hayhurst, said: “With this latest social housing bond NHFIC continues to enable community housing organisations to build more high-quality homes for lower income households, through its lower cost and longer-term financing. With the demand for affordable housing growing, every dollar the sector can save makes a difference. In a nutshell, it means extra homes and enhanced services.”
PowerHousing CEO Nicholas Proud said: “NHFIC’s latest bond will create additional affordable housing outcomes for many thousands of people at a time when it is most definitely needed.”
NHFIC would like to acknowledge the joint lead managers ANZ, CBA, Deutsche Bank, UBS and Westpac in helping NHFIC deliver its latest bond and first floating rate note.