Metropolitan Thames Valley Housing’s ‘A-’ credit rating affirmed

Metropolitan Thames Valley Housing (MTVH) has had its ‘A-’ long-term issuer credit rating affirmed this week, and Standard & Poor’s (S&P) global ratings’ outlook on the housing association has been revised from negative to stable.

On 19 December, S&P also revised its outlook on subsidiary Metropolitan Housing Trust (MHT) to stable from negative, and affirmed its ‘A-’ long-term issuer credit rating.  

The rating by S&P states that it considers MHT a core subsidiary of MTVH, since it owns and manages most of the group’s rental units and shared ownership sales. 

S&P affirmed its ‘A-’ rating on MHT’s £2bn senior secured and unsecured medium-term notes program and the £250m senior secured bond.

An ‘A-’ credit rating is generally considered investment-grade and reflects a relatively low credit risk. 

S&P global ratings stated that “the stable outlook reflects our view that MTVH will be able to manage risks associated with its large program of investments in existing stock through effective grants negotiation and cost management, while keeping its development program contained”. 

S&P said that it expects MTVH’s credit metrics to stabilise, despite the housing provider’s large programme of investments in existing stock.

In the 2022/23 financial year, MTVH invested £138m in existing stock, the same as in 2021/22.

S&P said that the credit rating could be lowered if investments in existing stock increase beyond their expectations, or if the group increases borrowing to fund the development of new homes.

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The rating report added: “Unlike many peers, MTVH’s performance remained relatively stable in the fiscal year ending March 31,2023, despite the increased demand for services”. 

In an unaudited update on 28 November, MTVH reported that its total turnover for the six months to 30 September was £209m, up 5.7% on the same period last year.

Its income from social housing lettings increased by 9%, while its turnover from sales fell to £13.5m, from £19.5m, as it sold 116 units compared to 149 last year.

In the rating, S&P states that it has also affirmed Metropolitan Funding PLC’s £250 million senior secured bond at ‘A-’.

Metropolitan Funding PLC was set up for the sole purpose of issuing bonds and lending the proceeds to the group, and it is viewed it as a core subsidiary of MTVH.