16 July 2021

Flagship completes debut public bond issue

On the 9 July 2021, Flagship Group issued its 40-year debut bond – a £250m public bond with £100m retained, with a re-offer spread of 1.969% and a coupon of 1.875%.

The issue was a sustainable bond, and the proceeds will be used to build new affordable homes and fund energy efficiency projects. This was the longest sustainable bond issued in the social housing sector and serves to highlight the growth in ESG linked financing for the sector.

Over 30 investors were approached as part of a three-day execution process, which included two days of marketing, a Global Investor Call (“GIC”) and 1-1 investor calls. Despite the longer than usual tenor, where there is generally less demand, there was lots of positive feedback from investors and the order book remained robust, with a final book of £335m.

David Armstrong, Chief Financial Officer said: “We are absolutely delighted with the extremely successful result for the Group, locking in historically low rates for the long term. This is another big step forward for Flagship, establishing ourselves in the sterling bond market where we aim to be a regular issuer.”

The transaction was supported by Flagship’s Treasury advisers Chatham Financial and marketed by joint lead managers (JLM) NatWest and Barclays.

Mills and Reeve provided legal advice to Flagship, Addleshaws acted for the JLMs, and Savills provided the property valuations.

Alex Fitzgerald, Head of Treasury and Regulation said: “It was a great partnership project; the team worked really well together. Their patience and support throughout the process made a huge difference and we learnt a lot. We’re delighted with the result.”