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Moody's, S&P Rate U.K. Social Housing SF Deal

Sanctuary Housing Association and its subsidiaries, the Sanctuary Group, plan to issue a £300 million ($477 million) secured bond transaction to support their debt-management strategy.

The group is looking to issue bullet bonds that will be sold by Sanctuary Capital Plc, Sanctuary Group's borrowing vehicle. The bonds will be backed by a portfolio of social housing letting properties owned by the Sanctuary Group.

Moody's Investors Service has assigned the proposed bond offering a 'Aa2' rating. The agency said in a press release that 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 as insufficient to lift the rating of the bonds over that of the Sanctuary Group itself.

Standard & Poor's has assigned its 'AA-' rating to the secured bond issue. The ratings on the proposed bond are the same as the issuer credit rating on Sanctuary Housing Association, which is currently rated 'AA-' with a stable outlook by S&P.   

The proceeds from the bonds are expected to be used for new development and refinancing of existing facilities.

Sanctuary Group is the U.K.'s largest provider of social housing with around 80,000 homes under management.

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