L&Q issues first housing association sustainability-linked bond

L&Q has issued the first sustainability-linked bond for a housing association. While many of the largest housing associations have secured sustainability-linked loans or bonds to support sustainable activities, this is the first bond where a housing association has agreed to pay extra if it misses ESG-related KPIs. The £300m 10-year bond targets operational carbon emissions, energy efficiency and affordable housing goals to be achieved in just over two years. L&Q must reduce scope 1 and 2 greenhouse gas emissions by 20% by 31 March 2024, compared with its 2019-20 baseline. The housing association has also committed to achieving an average SAP score of 72 or above, equating to a low EPC band C, by 31 March 2024. Finally, it must build 8,000 new homes, of which half will be affordable, by the same date. The bond was priced with a 2% coupon. If L&Q fails to achieve one or more of the KPIs that coupon rises by 12.5 bps. The bond was 2.5 times oversubscribed. Waqar Ahmed, group finance director at L&Q, said: “We want to enable sustainable economic and housing growth, to safeguard the environment, and to collaborate with others to achieve significant improvement in social impact and social value. “However, we face the challenge of funding these ambitions while simultaneously delivering a major programme of safety remediation work, improving residents’ homes, and increasing the supply of much-needed new homes. “Today’s successful issuance demonstrates the strength of our investor relationships, and the confidence they have in our strategy, our governance and our ability to adapt.” BNP Paribas was the sole sustainability structuring adviser on the transaction and joint bookrunner. To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or @EGPropertyNews Photo © Vivint Solar/Unsplash