Investor relations: Low-hanging fruit for public and private issuers

Between 2015 and 2022, HA issuers in the public market experienced an unprecedented fall in the cost of capital. Coupons on own-name issuance fell from the 5.00%–6.00% range in 2010/2011 to as low as 1.25% in 2022.

Issuers reaped the benefits of increased investor appetite for housing association bonds, attracted by long tenors on offer and a strong sector credit profile, even as rates fell. While much focus was placed on the initial sale and marketing period, ongoing investor engagement received less attention.

Since 2023, capital has become significantly more expensive, and it’s been a long time since many issuers have approached the capital markets. With these low-issuance volumes, investor relations have taken a back seat for both existing and new issuers.

Now, more than ever, HAs can benefit from effective and structured investor relations programmes. As a method for broadening demand and reducing issuance costs, it is low-hanging fruit. Improvements in other areas of the credit profile, such as profitability or ratings, are much more significant undertakings.

The Investment Association’s (IA) note on disclosure, reporting, and governance for housing associations, published in November 2022, provides helpful guidance. It lists "wants" from the investor community that would align HA reporting and investor relations with other related sectors, many of which your investor base will be viewing as alternative investments. These simple recommendations include:

• Regular bondholder update calls, at least annually
• A dedicated in-house investor relations officer or a key contact, along with CEO and CFO access
• Disclosure of any material information on the London Stock Exchange's Regulatory News Service (RNS) first, then on the website
• Second Party Opinions (SPO) or other external validation for sustainability finance frameworks
• Email distribution lists for material news reports or announcements
• Publication of half-yearly accounts (unaudited), available within six weeks of period-end
• Keeping annual reports and accounts available on the website for at least 10 years
• Regular updates on KPIs and secured assets for all types of financial security
• Publication of statements of compliance with any relevant public debt covenants
  

Many HAs already follow some of these best practices, but few consistently deliver on all of them. As the sector prepares to return to the capital markets in 2024, many would benefit from working towards these guidelines.

Investors make active decisions not only to buy your bonds at issue but also to continue holding them. Gaps in the information available to them for monitoring the credit can complicate their decision to remain invested. This can affect not just appetite for your existing issuance but any follow-up fundraisings in the future. This is relevant for issuers both large and small, public and private.

Chatham has reviewed investor relations for a sample of 30 large issuers representing over £34B in issuance and identified common areas where HAs fall short, such as the publication of accounting history, email distribution lists, and dedicated investor relations contacts. These should be easy fixes, based on already available information and the low cost to redistribute online.

Proactively maintaining a high standard of investor relations can help set your credit apart from comparable issuers and serves as an important conduit to external funders. Along with managing the ratings strategy and security profile, up-to-date market communication will build flexibility into future funding plans, allowing agile and efficient access to capital. This may be particularly helpful as HAs, commercial real estate, and corporate debt supply increases, potentially crowding the issuance market in the second half of 2024.

Please reach out to the Chatham team if you would like to discuss any aspects of your investor relations programme or capital markets issuance plans.