Clarion renews £3bn debt instrument to fund sustainable investments

Clarion has renewed a £3bn borrowing programme to fund a range of sustainable investments.

According to a circular published at the London Stock Exchange last week, the 125,000-home will use a Secured Euro Medium Term Note Programme (EMTN) to bring in the new funds. 

EMTNs are a type of medium-term, flexible debt instrument which is offered continuously, unlike a bond which is issued all at once. Usually issued in countries that deal with euro currencies, EMTNs allow issuers to enter foreign markets to obtain capital.

The housing association’s near term funding requirements are covered by a 33-year bond issued last year, but the note programme will enable it to respond quickly to market conditions and new opportunities.

Notes issued under the programme will be used for purposes in line with its Sustainable Housing Finance Framework.

The framework, published last April, includes items such as building new energy-efficient homes, retrofitting existing homes to improve them by at least two notches and to a minimum of EPC C, and installing low carbon technologies in homes.

As part of the creation of this framework, Clarion created a sustainable finance group, which meets at least quarterly and evaluates which projects should be funded.

This group is a senior cross-divisional team made up of representatives from various departments including group finance and development, and is jointly chaired on a rotating basis by the director of treasury and corporate finance and the sustainability director.

According to the circular, the housing association has been rated A3 by Moody’s, A- by S&P, A+ by Fitch. The programme has received the same ratings from each.

Unaudited figures for the nine months to 31 December have shown that Clarion increased its turnover from £720.3m to £807.2m and doubled its pre-tax surplus from £51.1m to £104.8m.

While Clarion has run an EMTN programme for a number of years, Sanctuary recently launched a £2.5bn programme for the first time.