NHFIC issues largest social bond in Australia - $315 million

NHFIC issues largest social bond in Australia - $315 million

Friday 22 March 2019

The National Housing Finance and Investment Corporation (NHFIC) is pleased to announce the successful launch of its first bond issue of $315 million.

The funds raised by the bond issue will be loaned to community housing providers (CHPs) that are providing social and affordable housing in Australia and the issue is the largest social bond aligned to international principles issued in Australia to date.    

NHFIC will pass on the benefits of strong investor demand for its first social bond by providing a fixed rate of under 3.00 per cent for 10-year, interest-only loans to several CHPs involved in the first round of NHFIC loans (including BlueCHP, CHL, Compass, Evolve, Hume and Unity).

This significantly cheaper finance will generate better cash-flow and greater financial certainty for these CHPs, resulting in up to 300 new affordable rental dwellings, enhanced support services and ongoing maintenance.

NHFIC is an independent Commonwealth entity that operates the Australian Affordable Housing Bond Aggregator which provides cheaper and longer-term secured finance for community housing providers (CHPs) by issuing bonds in Australia’s debt capital markets.

NHFIC CEO, Nathan Dal Bon said, “NHFIC is very pleased at the exceptionally strong level of investor demand for its first affordable housing bond which was four times oversubscribed. We are now able to pass on the benefits of NHFIC bonds through to CHPs which ultimately benefits tenants on lower incomes.”

“I would like to thank the many stakeholders who have helped make NHFIC’s first bond so successful, including the community housing sector, state governments and bond investors’’, said Mr Dal Bon.

The Community Housing Industry Association CEO Wendy Hayhurst said “the NHFIC interest rate is significantly below the rates that the community housing industry can typically borrow and means our members can put more money into building new homes.”

PowerHousing Australia CEO Nicholas Proud said, “having an affordable housing bond issue of this scale is an important step to see greater numbers of affordable homes financed for the betterment of Australians who are on low to moderate incomes.” 

NHFIC’s first bond is a significant milestone towards building a new investment asset class for affordable housing in Australia. Demand was very strong across a broad range of domestic and international investors, resulting in bids totaling in excess of $1.3 billion for NHFIC’s debut issue.

NHFIC would like to acknowledge the contribution of ANZ and UBS (Joint Lead Managers) and King & Wood Mallesons (legal advisers).

“We congratulate NHFIC on their inaugural bond issuance. By issuing in social bond format, they have contributed to a further deepening of the Australian sustainable finance markets and provided investors with a unique proposition that combines exceptional credit quality with social impact”, said ANZ’s Head of Sustainable Finance, Katharine Tapley.

“NHFIC's inaugural issue proved a resounding success, with an attractive mix of credit fundamentals and social bond verification drawing demand from a global audience. The A$315 million new issue is an impressive debut and provides investors with an additional diversification opportunity within the high-grade Australian debt capital market”, said UBS’ Head of DCM Syndicate, APAC, Tim Galt.

NHFIC will continue to work closely with the CHP sector and investors to ensure it can issue future social bonds on a regular basis to finance more affordable housing in Australia.

More information:

Ben Haslem | 0408 887 742 | Wells Haslem Mayhew

Nathan Dal Bon | 0402 970 271 | NHFIC