Social housing provider Stonewater has retained its A1 credit rating from independent credit ratings agency Moody’s.
The rating reflects Stonewater’s successful merger of Raglan and Jephson housing associations last year, which has resulted in sustained margins despite government-imposed cuts to social housing rents which were introduced in April this year. Moody’s also recognised Stonewater’s high proportion of revenues stemming from social housing activities and the organisation’s strong liquidity relative to net capital requirements.
The rating also allows for the housing provider’s high debt levels following major bond issuances in 2015, and a weakening in Stonewater’s interest coverage levels.
Moody’s assigns ratings based on risk and the borrower’s ability to make interest payments. The agency backs its ratings with exhaustive financial research and unbiased commentary and analysis. The agency rated Stonewater ‘at the upper end’ of the range of Moody’s-rated English housing associations, whose ratings range from Aa3 to Baa1.
“This latest A1 rating highlights Stonewater’s strong financial performance in what has been a challenging market for social housing providers,” says John Bruton, Stonewater’s executive director for finance. “It also reflects Moody’s confidence in our business strategy and our ability to deliver our ambitious housing development programme which will create 2,765 new homes by 2021.”
Stonewater’s A1 Moody’s rating follows the Homes and Communities Agency’s (HCA) re-confirmation of the social housing provider’s governance and financial viability gradings in its latest round of regulatory judgements published last month (November). Stonewater retained its G1 grade for the social housing regulator’s governance requirements, and its V1 rating for meeting the HCA’s financial viability performance standards which cover a wide range of adverse scenarios.
