Bromford retains A+ credit rating from S&P

S&P Global Ratings has confirmed Bromford Housing Group’s ‘A+’ long-term issuer credit rating and said its outlook is stable. Bromford has also retained its A2 rating with Moody’s.

The ratings agency highlighted the Gloucestershire-based housing association’s “solid management expertise”, “prudent cost planning and financial headroom” and “very strong liquidity”, as key factors in its review on 22 July.

S&P’s report noted that there is strong demand for Bromford’s affordable properties, with rent estimated to be just over 55% of the average market rent.

The agency added that close to 90% of Bromford’s existing stock already meets Energy Performance Certificate C standards or higher, which it views “as more favourable than sector peers”.

Last month, Bromford announced that it had entered into discussions to merge with Flagship Housing Group to form an 80,000-home housing association, with the capacity to build up to 2,000 new homes per year.

Bromford currently owns 46,000 homes in central and South-west England and Flagship owns 32,000 homes in the East of England.

On the proposed merger, S&P said: “Bromford’s currently strong financial indicators would mitigate pressure of the potential business combination, and hence we do not expect it to have an immediate impact on our rating on Bromford.”

>> See also: S&P downgrades credit rating of London housing association RHP

>> See also: S&P downgrades L&Q’s credit rating citing ‘sizeable’ need for investment in stock

Bromford’s director of treasury Imran Mubeen said the housing association was “delighted that S&P has recognised our performance over the past year by reaffirming our A+ rating with a stable outlook.”

Mubeen added: “The A+ stable rating is also testimony to the opportunity and capacity we can create through the proposed merger with Flagship, with £5bn of new funding over the next 15 years delivering over 30,000 new, affordable, energy-efficient homes perfectly curated within our existing financial framework and A+ rating envelope.

“We arrive here by design and through intent, with a full shadow credit analysis run on every iteration of the business plan we produce. This is particularly important at a time when we are seeing continued pressure in our sector and a migration to the weaker single A or BBB.”

“Throughout the rating process, we believe it’s important to showcase how we are delivering for our customers. It is also our responsibility to explain our business plan and treasury strategy to them. That’s why we were pleased to give S&P the opportunity to meet our customers during the year, allowing the agency to hear directly from customers about their lived experiences in their homes and their engagement with our broader services.

“The confirmation of this rating, along with our A2 rating from Moody’s will support us when we return to the market to seek additional funds, helping us achieve our goals of tackling the housing crisis by building more homes, investing in our existing properties, and progressing towards net zero, all underpinned by sector leading funding deals.”