NHFIC finalises $562 million social bond

Housing advocates say the bond’s success shows there is keen interest from investors in Australian affordable housing

The National Housing Finance and Investment Corporation (NHFIC) has finalised the largest ever social bond from an Australian issuer, which is expected to save community housing providers more than $80 million. 

Funds raised from the $562 million bond will help ten community housing providers (CHPs) – across New South Wales, South Australia, Tasmania and Victoria ­– to finance 2,736 properties including 775 new dwellings.

NHFIC is an independent Commonwealth entity that provides cheaper and longer-term secured finance for community housing providers by issuing bonds in Australia’s debt capital markets.

The third NHFIC bond will pass on the benefits of strong investor demand by providing a fixed rate of 2.06 per cent for 12-year interest only loans to CHPs. This will save providers more than $80 million in interest payments over this period.

NHFIC CEO Nathan Dal Bon welcomed the announcement.

“It is pleasing to see the strong support from domestic and international investors for the community housing sector,” Dal Bon said.

“These funds will be channeled directly to community housing providers to support Australian’s most in need at such a challenging time.”

Loans from the bond will be used to support several CHPs including Housing Choices Tasmania, Argyle Community Housing (NSW), BaptistCare (NSW and ACT), Common Equity Housing Ltd (Victoria), Junction and Women’s Housing (SA), Mission Australia Housing (NSW), and Women’s Housing Limited (Victoria).

Junction and Women’s Housing CEO Maria Palumbo thanked NHFIC for helping the organisation during the difficulties of COVID-19.

“Through NHFIC, we have a long term, low cost, stable and predictable funding solution enabling us to grow our housing portfolio and help more people realise their dream of homeownership, while reducing pressure on the rental market,” Palumbo said.

“As we recover from COVID-19, this security enables us to continue to stimulate the economy through the delivery of more affordable housing outcomes – which has never been more important.”

Housing advocates believe NHFIC bonds highlight how Australia’s community housing sector is emerging as a new investment asset class, with the latest bond drawing strong interest from domestic and offshore investors, including a number of Australian superannuation funds.

Wendy Hayhurst, CEO of Community Housing Industry Association, said the success of the third NHFIC social bond was proof “that there is keen interest from investors in Australian affordable housing.”

Westpac executive director Allan O’Sullivan said: “It was pleasing to see the support for NHFIC’s latest issue [which] reinforce the depth of the market for social investments and further enhance the agency’s social bond platform”.

Tessa Dann, director of sustainable finance at ANZ, added that NHFIC’s use of social bonds to utilise investor capital for the community housing sector was critical “given the impact of the COVID-19 pandemic on the ability of people to remain in housing”.

This announcement follows the launch of a $315 million NHFIC bond in March last year.

Since its establishment two years ago, NHFIC funding has helped CHPs to deliver more than 7,100 homes.