NHFIC finalises $562m bond issue

The National Housing Finance Investment Corporation (NHFIC) has announced that it has finalised what it says is the largest social bond – $562 million – by an Australian issuer.

The funds raised from the NHFIC bond will support 10 community housing providers (CHP) across NSW, South Australia, Tasmania and Victoria. It will finance 2,736 properties including 775 dwellings.

The funds raised by the bond will provide a fixed rate of 2.06 per cent for 12-year interest-only loans to the CHPs, which provide subsidised housing.

In total, the bond is expected to save the participating CHPs more than $80 million in interest payments over the next 12 years, according to the NHFIC.

The first loan to a Tasmanian CHP forms part of the latest bond, with Housing Choices Tasmania to use the funding for 192 existing and new social and affordable homes.

Other CHP loans supported by the bond include:

• SGCH Sustainability (NSW) – $210 million

• BaptistCare (NSW & ACT) (NSW) – $144 million

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  Mission Australia Housing (NSW) – $65 million

• Common Equity Housing Ltd (Victoria) – $50 million

• Junction and Women’s Housing (SA) – $26.14 million

• Bridge Housing (NSW) – $24.86 million

• Housing Choices Tasmania (Tasmania) – $17 million

• Argyle Community Housing (NSW) – $12 million

• Women’s Housing Limited (Victoria) – $9 million

• Pacific Link Housing (NSW) – $4 million

Commenting on the funding announcement, NHFIC CEO Nathan Dal Bon said: “It is pleasing to see the strong support from domestic and international investors for the community housing sector. These funds will be channelled directly to community housing providers to support Australians most in need at such a challenging time.”

Mr Dal Bon added that the bonds demonstrate that Australia’s community housing sector is emerging as new investment class.

Since March 2019, the NHFIC has issued nearly $1.2 billion of social bonds, which it said makes it the biggest issuer of social bonds in Australia.

The AAA-rated bond drew interest from domestic and offshore investors, including superannuation funds, according to Mr Dal Bon.

The NHFIC acknowledged the contribution of joint lead managers ANZ, UBS and Westpac, and legal advisers King & Wood Mallesons. It also thanked the relevant state governments for their cooperation in enabling the transactions with CHPs.

Since its establishment two years ago, NHFIC’s funding has financed more than 7,100 new and existing homes that have been built and managed by CHPs, Mr Dal Bon said.

Joint lead manager Allan O’Sullivan, executive director at Westpac, said, “It was pleasing to see the support for NHFIC’s latest issue reinforce the depth of the market for social investments and further enhance the agency’s social bond platform.”

Echoing his sentiments, UBS executive director Tim Galt said, “This is the largest order book, largest print transaction, lowest coupon and longest bond NHFIC has issued to date.”

“Our credit goes to the NHFIC team in combining global liquidity, demand for socially responsible investment opportunity and an ongoing bid for duration in securing this impressive outcome.”

ANZ director, sustainable finance, Tessa Dann highlighted the importance of funding for community housing during times of economic shocks.

“NHFIC’s use of social bonds to tap investor capital for the community housing sector is critical given the impact of the COVID-19 pandemic on the ability of people to remain in housing.”

Assistant treasurer and minister for housing Michael Sukkar said the bond issuance was oversubscribed by investors for a third time, both domestic and international, by a factor of three.

"This again demonstrates the potential for Australia’s community housing providers to grow significantly with NHFIC providing the vehicle to make this happen," he said.

According to Mr Sukkar, the third bond is expected to save the participating CHPs more than $80 million in interest payments over the 12-year term of the loans.

"Cost savings can be channelled by CHPs into new projects, as well as providing additional tenant services ranging from employment and training, through to domestic violence and aged care support." 

[Related: NHFIC launches $315m bond issue]