Following the annual review of our operational and financial performance by credit rating agency Moody’s, Alliance has been given an A2 rating. This is a downgraded rating from our previous A1 grade.
Alliance is one of six housing associations and four special purpose vehicles to have been regraded to A2 from A1. A2 is a strong investment grade rating and reflects Alliance’s metrics being more in line with A2-rated peers due to rising debt levels and lower interest coverage ratios.
This grading is reflective of the operating environment and the current financial situation. Alliance’s ambitious development strategy combined with the testing operating environment will increase debt levels and be detrimental to the previously very high interest cover results. The peak gearing result is forecast at just over 50% against a lender covenant of 75% maximum. Interest cover results are also still strong compared to the sector average and lender covenant of 100% minimum.
The Moody’s report stated Alliance’s specific strengths, including: strong interest coverage rations, albeit deteriorating; low debt to revenues; a simple debt profile; a strong unencumbered assets position; and a clear strategy focused on social housing lettings.
Chief Finance Officer, Claudette Marcano said: “This rating action reflects that we are delivering our strategy, despite the difficult operating conditions in the UK. Our robust risk management practices and income from a steadily growing asset base mitigate the effect of the current economic conditions.
“The grading will not affect our development plans nor our current loan arrangements. We’re committed to our strategic goals of building more affordable homes and investing in existing homes and neighbourhoods.”