GreenSquareAccord’s credit rating has been downgraded

Moody’s has changed Jigsaw Homes’ credit outlook from negative to stable and has affirmed the 35,000-home housing association’s long-term issuer A2 credit rating, which indicates low credit risk.

balance sheet finances

Jigsaw’s outlook has been upgraded from negative to stable, while GreenSquareAccord’s credit rating has been downgraded due tight covenant headroom, debt levels and risks associated with the accelerated sales of assets. 

The change in outlook from negative to stable reflects Moody’s anticipation that Jigsaw’s operating performance will strengthen compared to the results recorded in 2023.

Due to slower debt growth than previously anticipated, the credit rating agency has also affirmed Jigsaw Funding plc’s A2 rating for senior secured debt.

This indicates that Jigsaw’s secured debt instruments are also considered to have a low credit risk.

Jigsaw’s capital spending is lower than planned, with Moody’s stating that “the organisation exceeded its prudent forecast”.

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Jigsaw Homes’ operating performance will also recover following a “fiscal dip” in 2023. The boost will come from additional rental income.

According to Moody’s, Jigsaw’s operating margin is projected to average 27% over the next three years, a notable increase from the 21% recorded in fiscal 2023.

Jigsaw expects to deliver over 900 new units by March 2024, compared to 701 units in fiscal 2023, which will boost its income, Moody’s has noted.

Jigsaw’s Baseline Credit Assessment (BCA) has also been affirmed at a3. Moody’s commented that this reflects Jigsaw’s risk-averse financial management and its strong focus on social housing lettings (SHL).

The report, published on 23 February, added that the affirmations also reflect Jigsaw’s strong liquidity, which increased following its December 2023 debt refinancing.

Moody’s stated that “based on its current levels of liquidity, Jigsaw will not need to borrow again until March 2027”.

GreenSquareAccord has received confirmation from Moody’s of a downgrade in its credit rating of the Group from A3 Negative to Baa1 stable, which signifies moderate credit risk. GSA’s outlook remains stable.

Moody’s recognised GSA’s proactive risk management, but cited several factors contributing to the downgrade.

The areas of weaknesses included tight covenant headroom, debt levels and the delivery risk associated with the accelerated sales of assets as part of the group’s forward plan.

On the downgrade, GSA said: “Clearly, we are disappointed with this outcome given the progress that has been made in the last two years to address risk in the group and stabilise our position. We remain focused on continuing to improve the position of the group and committed to our forward plan which demonstrates a clear trajectory towards achieving an improved rating in the short to medium term.”