Bond finance overtakes bank lending for first time - HCA

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

Bond finance has for the first time overtaken bank lending, according to the latest quarterly survey by the Homes and Communities Agency (HCA), covering the period January to March 2012.

According to the agency, £700m came from the bond market in the quarter, while traditional bank lending accounted for £500m. In total, £1.2bn-worth of new facilities were arranged - a 40% increase over the previous quarter.

The survey is based on the responses of all private registered providers in England owning and/or managing more than 1,000 homes.

The HCA, however, has warned that banks are still crucial as the sector reported it is expecting to require an additional £5 billion over the next 12 months.

Jonathan Walters, deputy director of regulatory operations, said "banks are still crucial and will remain an important source of finance for their existing borrowers. We expect to see the capital markets to continue to play an increasingly important role for raising new debt finance".

The sector’s total reported borrowing facilities now stand at £64.7bn - a year-on-year net increase of £1.9bn.

Surpluses from total asset sales rose to £164m from £104m in the previous quarter. Sales rose to £639m from £389m.

Nearly 40% of the sales came from shared ownership compared to 50% in previous quarters.

Walters added: “The fact that the survey contains a lot of information on private finance, illustrates that the sector is using sophisticated tools to raise capital and to hedge against risks.”