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- The National Housing Finance and Investment Corporation (NHFIC) has finalised two new social bonds for $462 million
- The two new bonds take the total issuance to approximately $2 billion since the organisation was established three years ago
- With 28 investors picking up the fixed rate bond and 15 investors taking up the floating rate note, the social bonds were more than two times oversubscribed
- Funds from NHFIC’s fixed rate bond will finance 10-year fixed rate interest-only loans to eight community housing providers
- Sydney-based community housing provider SGCH Group received the largest loans from the bond and floating rate note at $250 million
The National Housing Finance and Investment Corporation (NHFIC) has finalised two new social bonds for $462 million.
The two new bonds take the total issuance to approximately $2 billion since the organisation was established three years ago.
A $362 million fixed rate note and a $100 million floating rate note are among the new 10-year social bonds.
With 28 investors picking up the fixed rate bond and 15 investors taking up the floating rate note, the social bonds were more than two times oversubscribed, further expanding NHFIC’s investor base.
Both local and other overseas investors took part.
The latest social bonds follow NHFIC’s raising of $343 million last month with its first 15-year sustainability bond.
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 through 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,” Dal Bon said.
“This bond will show the tightest margin relative to Commonwealth Government bonds that NHFIC has issued so far.”
Funds from NHFIC’s fixed rate bond will finance 10-year fixed rate interest-only loans to eight community housing providers (CHP), supporting more than 1000 new and over 2800 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.
Sydney-based community housing provider SGCH Group received the largest loans from the bond and floating rate note at $250 million.
“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,” SGCH Group CEO Scott Langford said.
Total savings for participating CHP’s from NHFIC bonds to date exceed $420 million, which the CHPs can use to provide wrap around services and more social and affordable housing.
“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,” portfolio manager for bond investor Pendal Group George Bishay said.
“Our clients love to hear stories from CHPs about real-world mums, dads and underprivileged Australians benefiting from NHFIC-funded affordable and social housing.”
Westpac Financial Markets associate director Jack Geddes said investors have an increasing demand for green and social assets.
“We saw outsized interest from key investors in this transaction relative to vanilla bond issues,” he said.
ANZ, CBA, Deutsche Bank, UBS and Westpac were the joint lead managers for the latest bond and first floating rate note.
