Managing or owning more than 230,000 social or affordable homes, Places for People (PfP) is one of the largest providers of social housing in the UK.
It has a strong relationship with its banks, having benefited from 13 bilateral bank facilities totalling £825m, which incorporated a combination of secured and unsecured tranches. Bilateral banking facilities are common within the sector and are typically 1/3rd drawn with the balance providing funding certainty for future developments. However, managing multiple bilateral facilities, including different covenants and test dates, was time-consuming and cumbersome for the treasury team.
PfP looked to address this issue by refinancing its multiple facilities into one single syndicated revolving credit facility (RCF) on a fully unsecured basis with a quantum of £900m sought. The aim was to replicate banking structures other investment-grade corporates have with their lenders.
The refinancing was launched on 22 July with a combination of both incumbent and new banks. Despite the move to unsecured, and amid a turbulent macroeconomic backdrop, the transaction was priced competitively and at an improved level compared to the existing weighted average margin. This was driven by robust lender sentiment to support the financing as lenders expressed appetite to finance a future accordion facility.
In addition, and to work alongside its clear social housing goals, PfP agreed on three meaningful and stretching environmental and social KPIs aligned with four of the UN Sustainable Development Goals. These are documented in line with the LMA’s Sustainability-Linked Loan Principles with performance tied to upward and downward margin ratchets.
The facility represents a landmark transaction as the biggest syndicated RCF of any provider within the sector. Furthermore, PfP has set a clear framework for other social housing providers to obtain a similar facility, ensuring a simpler and cleaner structure for all stakeholders.
The long-term objective of PfP is to evolve to a fully unsecured financing structure which differentiates it from the majority of its peers. The refinancing of the bilateral RCF facilities, which were a mix of secured and unsecured facilities, is a key plank of this long-term objective. While existing lenders were aware and broadly supportive of the transaction prior to launch, utilising a formal approach to market with clear expectations for lenders, and organising the lender group into tiers with clarity on what that would mean for lenders were critical elements of the deal.
Furthermore, in line with PfP’s own social purpose, the team sought to ensure this facility was ESG linked. This required appropriate coordination with PfP’s ESG team to agree three environmental and social KPIs that would be presented as part of a detailed ESG presentation and could stand up to scrutiny during rigorous bank approval processes. Through appropriate coordination between the treasury and ESG teams at PfP, as well as assistance from EY and subsequently NatWest and Barclays as joint ESG coordinators, PfP was able to ensure the facility was ESG linked.
PfP was supported by EY Debt Advisory as part of this transaction. The banks were Barclays, NatWest, HSBC, Bank of China, Lloyds, MUFG, NAB and BNP Paribas.
What the judges said
“In a very strong category, Places for People was a unanimous winner. With clear environmental and social KPIs, it was a ‘first in the sector’ RCF that brought in new banks, while reducing complexity, moving from a secured to unsecured syndicated facility.”
IHG Hotels
The judges also highly commended IHG Hotels and Resorts, which successfully refinanced a previous $1.35bn RCF that was due to mature in September 2023. The final result achieved pre-COVID pricing levels, improved long-term covenants and attracted four new banks.
