NHFIC launches $315m bond issue

The National Housing Finance Investment Corporation (NHFIC) has announced its second $315-million social bond issue through the Australian Affordable Housing Bond Aggregator (AAHBA), its second such issue and the equal-largest social bond for housing in Australia.

The funds raised by the bond will provide community housing providers (CHPs) 10.5-year interest-only loans with an interest rate of 2.07 per cent. This is expected to save CHPs around $50 million in interest payments over the next decade, according to the NHFIC.

The funds raised by the second bond will be loaned to CHPs to support the financing of over 2,000 properties across NSW, Victoria, Queensland, Western Australia and South Australia, including the supply of more than 360 new social and affordable dwellings.

Specifically, the most recent bond will support seven CHPs around the nation, including:

• $51.14 million for Bridge Housing in NSW
• $72 million for HousingFirst and Port Phillip Trust in Victoria
• $65 million for Haven Home Safe in Victoria
• $55 million for Housing Choices Australia in Victoria
• $4.86 million for Churches of Christ in Queensland
• $35 million for Foundation Housing in Western Australia
• $32 million for Anglicare SA in South Australia

NHFIC CEO Nathan Dal Bon said he was pleased about the increased desire from super funds and local and international investors to invest in these bonds, for the betterment of social and community housing in Australia.

“NHFIC is very pleased with the strong level of demand from both local superannuation funds and offshore investors for its bonds and to see CHPs from around Australia benefiting from NHFIC’s finance,” he said. 

“Super funds have an increasing desire to invest in social and affordable housing in Australia, and NHFIC’s bonds provide them with an opportunity to do this at scale. 

“These bonds have also drawn commitments from significant international investors, which is further evidence of community housing emerging as a new investment asset class in Australia,” Mr Dal Bon said. 

“This brings the total value of loans the NHFIC board has approved to over $830 million in the 18 months since its establishment, supporting the delivery of more than 1,000 new, and 3,600 existing, social and affordable homes, ultimately benefiting tenants on lower incomes,” Mr Dal Bon added. 

Investor commentary

The social housing bonds have been supported by a range of investors, including superannuation funds Cbus and UniSuper, as well as ANZ and Westpac.

Cbus CIO Kristian Fok commented: “It is fantastic to see the tangible impact that NHFIC is having for community housing providers by creating savings through lower interest costs and through construction of social and affordable homes.” 

Likewise, ANZ’s head of sustainable finance, Katherine Tapley, said: “Social and affordable housing is attracting more interest from investors as a standalone asset class, given the bonds provide investors an opportunity to deploy capital towards essential social services.

“Investors globally are keen to mobilise capital in assets that not only help provide environmental benefits but address core social needs.” 

Westpac’s head of frequent borrowers and syndicate, Allan O’Sullivan, shared a similar sentiment.

“NHFIC’s Social Bond series 2 has once again highlighted the growing investor appetite for ESG assets while offering diversification given the sovereign guarantee structure,” he said.

“Series 2 was again very well received by the market, which bodes well for NHFIC as they become a more established issuer in the Australian dollar debt markets. 

“Westpac is proud to be involved in a strategic initiative that supports improving outcomes in the affordable housing sector.” 

[Related: NHFIC provides $65m loan for affordable housing]