05 Nov 2020

L&Q raises £250m to continue building affordable homes amidst pandemic

NatWest helps L&Q, one of the UK’s largest housing associations, to raise £250 million via a bond issuance as part of new euro medium-term note (EMTN) programme.

Delivering homes and creating opportunities for its residents 

L&Q is one of the UK’s most successful independent social businesses, offering housing to around 250,000 people in more than 105,000 homes, primarily across London and the South East and investing millions of pounds each year via the L&Q Foundation and the L&Q Academy to create opportunities for its residents. 

Bolstering short-term liquidity and securing long-term funding

Following the onset of COVID-19, L&Q proactively established a £300m Commercial Paper (CP) programme under the UK government’s COVID Corporate Financing Facility (CCFF) to bolster its short-term liquidity. In addition, L&Q wanted to raise further funds via an euro medium-term note (EMTN) programme, which would allow easier access to multiple capital markets and simplify the security charging process.  

To get advice on formulating the framework for its EMTN programme L&Q turned to NatWest, which had already helped with the CCFF documentation during the summer. The £250m bond, issued on 13 October 2020, is the first debt issuance from the EMTN and also marks L&Q’s return to the Sterling bond market, where the housing association has a strong track record with over £2.4bn of outstanding bonds.

Adding diversity to L&Q’s existing bonds portfolio with intermediate tenor issuance

L&Q decided to approach the Sterling market with a transaction targeting the intermediate 15-18 year tenor range, to complement its existing bonds and to offer something a little bit different to investors amidst a wave of long-dated transactions from housing associations this year. 

After intensive marketing resulted in a large number of investors signalling their appetite, L&Q proceeded with an 18-year £250m bond, significantly tightening its initial pricing. This offering was met with over £890m of investor orders at the final spread level. 

Bond goes towards building more affordable homes

The newly raised funds will help L&Q to continue deliver on their vision that everyone has a quality home they can afford.

Martin Watts, Director of Treasury at L&Q, said: “We are delighted with the successful placement of a further £250m of bonds which has allowed us to meet our stated objectives whilst further strengthening our liquidity position. The NatWest team performed exceptionally well during the course of this transaction. The support and guidance provided was superb, and the execution strategy was spot on.  What impressed us most was the collaboration and dedication of the entire deal group, the thought process behind decision making and importantly, outlining to us the choices that had been considered and debated. Their proposals were always well thought out, clear and concise. We cannot ask for anything more than that.”                              

Dominic Brindley, Head of Public Sector at NatWest, added: “We’re delighted to support L&Q in preparing its CCFF documentation and EMTN framework, culminating in this hugely successful re-entry to the public bond market. This demonstrates the flexibility and speed to market that an EMTN provides and shows the strong investor appetite for intermediate tenors. The heavily oversubscribed issuance is also a testament to L&Q’s fantastic engagement with new and existing investors, and it’s another example of NatWest’s purpose-led approach to supporting clients.”


This article is for media use only and is not a financial promotion.

Security may be required.  Product fees may apply.  Subject to status.

Posted in: