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£250m fundraising and A+ credit rating for Karbon Homes
Case studies

£250m fundraising and A+ credit rating for Karbon Homes

£250m in long term financing raised
153bps margin of Landmark debut
A+ rating achieved
Background
  • Karbon Homes is one of the largest housing associations in the North of England, owning and managing nearly 30,000 homes.
  • Karbon plans to build more homes in the North-East, for which it requires up to £250m in long term funding.
  • Karbon had a number of relatively high cost bank facilities in place, for which it was seeking cheaper, long term funding.
Our Approach
  • JCRA worked with Karbon for 12 months to develop a suitable financing solution, including a shorter term bank facility.
  • For long term funding a public bond or private placement were deemed the best solutions, though given market volatility choosing a particular market was difficult.
  • On this basis, JCRA advised on the selection of joint lead managers, who were able to execute in either market to provide flexible decision making.
  • JCRA analysed the current market, potential pricing and flexibility of each option, advising Karbon a public bond issue would achieve the best outcomes.
  • A rating was required to issue a public bond, JCRA assisted Karbon in achieving an A+ rating, currently the highest credit rating in the  North-East.
Benefits
  • Karbon was able to achieve longer-term funding than it would have from banks, with a 29 year all-in rate of 3.50% for £150m raised, with £100m retained for future sale, without any corporate covenants.
  • Karbon was able to repay some of its more expensive bank facilities, reducing long term interest costs, allowing Karbon to build more homes.
  • Strong debut issue, reflecting substantial investor appetite for Karbon and the North-East.
  • This initial issue provides a good foundation for future capital markets investment.
 

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