London, 23 November 2012 -- Moody's Investors Service has today assigned an Aa3 issuer rating to Together Housing Group (THG). In addition, the rating agency has assigned an Aa3 debt rating to the proposed GBP200 million bond issuance of Together Housing Finance Plc, which is THG's primary borrowing vehicle.
The negative outlook on the issuer rating is in line with the outlook on the UK sovereign ratings, given THG's strong financial, operational and economic linkages with the central government. The negative outlook on the debt rating mirrors the negative outlook on THG's issuer rating.
TOGETHER HOUSING GROUP
Today's rating assignment reflects the strong cash flows that THG generates from a robust foundation of low-risk social-housing letting and limited sales. The rating also incorporates Moody's assessment of a strong regulatory framework for English housing associations, and the high proportion of THG's revenues derived from government subsidies, which adds to its revenue stability.
However, the rating also takes into account uncertainties related to governance changes and THG's high exposure to floating rates. Since its creation as a group in 2011, THG has been actively restructuring its operations with the aim of strengthening its financial autonomy. With the upcoming bond refinancing, THG plans to lift legacy restrictions from its Large Scale Voluntary Transfer (LSVT) acquisitions and reduce its floating-rate debt, adding certainty to its business plan. THG's historical reliance on sales to cover its interest costs has been now fully eliminated, with no planned reliance going forward.
As per the application of Moody's Joint Default Analysis methodology for government-related issuers, THG's baseline credit assessment (BCA) has been set at baa1. The final Aa3 rating reflects the uplift provided by Moody's assessment of a very high likelihood of support from the UK government (Aaa, negative) in the unlikely event of THG experiencing acute liquidity stress.
Moody's notes that low-risk social-housing letting generated almost the entirety of THG's revenue in 2012, contributing to a social-housing-letting interest coverage of 1.9x in 2012. This is strong relative to its peers. As a result, THG has avoided a structural reliance on higher-risk activities to cover its interest costs.
THG reported a comparatively low level of sales (3% of revenue) in FY2012. Going forward, sales are projected to grow slightly and will expand into market sales, which is a new market for the organisation.
PROPOSED GBP200 MILLION BOND ISSUANCE
THG aims to issue fixed-rate 30-year bullet bonds in FY2013 via its borrowing vehicle Together Housing Finance plc. The proceeds of the bonds are expected to be used for refinancing and capital investment.
The Aa3 rating assigned to the GBP200 million bond issuance of Together Housing Finance plc is derived from the Aa3 issuer rating of Together Housing Group. Together Housing Finance plc is wholly owned and controlled by Together Housing Group, the group parent.
Accounting for the bond issuance, debt is projected to hover around its existing levels of 3x-3.5x revenue in 2013-17, which is low compared with its rated peers. Floating-rate exposure, now 42% of debt, should fall to around 20%.
The bonds are expected to be secured by a portfolio of largely social-housing-letting properties owned by three of THG's subsidiaries (Chevin Housing Association Limited, Pennine Housing 2000 Limited and Twin Valley Homes Limited). Most of the properties will be valued at Existing Use Value -- Social Housing (EUV-SH) at an asset-coverage ratio of 1.05x. Moody's views this threshold of asset coverage as offering limited enhancement for bondholders and is insufficient to lift the rating of the bonds over that of THG itself.
In addition, the bonds will have the benefit of certain unconditional and irrevocable guarantees from five of six of THG's fully owned subsidiaries, which currently represent almost the entirety of the group's stock and revenues.
The ratings assigned are based on documentation received by Moody's as of the rating assignment date. If the structures change from those in the documentation submitted, Moody's will assess the effect that these differences may have on the ratings.
WHAT COULD CHANGE THE RATING -- UP / DOWN
Whilst unlikely in the near term given the negative outlook on the sector, one of the following could have positive rating implications: (1) an operating margin improving to levels around 30% revenues, as per current projections; (2) a social-housing-letting interest coverage structurally at 2x and a recurrent cash flow interest coverage at 3x, which are levels THG aspires to achieve in the next three-to-five years; (3) debt falling below 3x revenue; (4) a reduced exposure to floating-rate debt, which is planned post bond issuance; and (5) the successful delivery of planned governance changes to strengthen internal controls.
Negative pressure could be exerted on the rating by (1) an increase in sales in excess of current plans; (2) a deterioration in its recurrent cash-interest coverage below 2.5x and a social-housing-letting interest coverage below 1.5x; and (3) debt levels that remain above 3.5x revenue. Additionally, a weaker regulatory framework, a dilution of the overall level of support from the UK government or a downgrade of the UK sovereign rating would also exert downward pressure on the rating.
Any change to THG's issuer rating would have a corresponding change to the debt rating of Together Housing Finance Plc.
THG was formed in April 2011 from the merger of three existing housing groups. At March 2012, homes under management were around 35,000. About two-thirds of its stock is related to LSVT acquisitions, with operations concentrated in the north of England.
The methodologies used in these ratings were English Housing Associations published in September 2010, and Government-Related Issuers: Methodology Update published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
The ratings have been disclosed to the rated entities or their designated agent(s) and issued with no amendment resulting from that disclosure.
Information sources used to prepare each of the ratings are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes of issuing these ratings.
Moody's adopts all necessary measures so that the information it uses in assigning the ratings is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entities or their related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.
Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Gianfilippo CarboniAsst Vice President - Analyst Sub-Sovereign Group Moody'sInvestors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 David Rubinoff MD - Sub-Sovereigns Sub-Sovereign Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED,DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error negligent or otherwise or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations -- Corporate Governance -- Director and Shareholder Affiliation Policy."
Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001.
Notwithstanding the foregoing, credit ratings assigned on and after October 1, 2010 by Moody's Japan K.K. ("MJKK") are MJKK's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. In such a case, "MIS" in the foregoing statements shall be deemed to be replaced with "MJKK". MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO.
This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser.
Heute im Fokus
Tsipras schwört seine Anhänger auf 'Nein' bei Referendum ein. Knappes Ergebnis bei Hellas-Referendum erwartet. Friedliche Demonstration gegen Sparauflagen für Griechenland. Alter Flughafen Berlin-Schönefeld bleibt länger am Netz. Tsipras fordert Schuldenschnitt und 20 Jahre mehr Zeit. Im Übernahmepoker um K+S verhärten sich die Fronten. Tsipras: Ein Nein beim Referendum wäre kein Ende der Verhandlungen. Varoufakis: Einigung mit Gläubigern kommt in jedem Fall zustande.
Diese Aktien sind auf den Kauflisten der Experten
Welcher Fußballtrainer verdient am meisten?
Diese Aktien stehen bei Hedgefonds ganz oben