S&P says 93,000-home Scottish housing association has “very strong liquidity”

Wheatley Group has retained it’s A+ (stable) credit rating from S&P.

The credit rating agency, in an update yesterday, said it expects the 93,000-home association’s margins to recover from 21% this year to around 27% by April 2027. It said there is “strong demand” for Wheatley Group properties.

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It said: “The group’s ability to raise rents, its expanding asset base, and the grants secured for investments in existing stock will gradually offset the cost pressures from the increasing investments in existing stock.

“Over our forecast horizon, we anticipate that the group will raise rents more than it has historically, bringing its rent increases to more in line with the average across the Scottish housing sector. We expect the resulting increase in rental income to create additional headroom for expanding investments in existing homes, thereby underpinning the projected recovery in financial performance.”

S&P affirmed the long-term A+ issuer credit rating for both the parent Wheatley Group and subsidiary Wheatley Homes Glasgow, as well as the A+ rating for a £300m bond issued by financing arm Wheatley Group Capital.

S&P said it views Wheatley’s liquidity as very strong. It estimates Wheatley will have enough liquidity sources to cover its uses by 1.5x over the next 12 months.

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It said there will be a slight deterioration in the liquidity coverage ratio over the next few months but this weakening will be “temporary” as the group plans to secure additional funding.

It said: “Over the past 12-18 months, amid unfavourable interest rate conditions, the group has heavily relied on its committed facilities to fund capital investments. While this has led to a temporary shrinkage of the group’s liquidity buffers, we expect reserves to be replenished over the next few months. We continue to consider that Wheatley has satisfactory access to external funding if needed.”

S&P last year completed 644 homes and started work on a further 769.