Moody's placed its Baa2 long-term issuer rating on Genesis Housing Association Ltd. and the long-term senior secured ratings of GenFinance II Plc under review for upgrade ahead of the residential property company's proposed merger with homebuilding and property-development service provider Notting Hill Housing Association.
The two companies agreed in principle to a merger in October 2017 that would form one of the U.K.'s largest housing associations.
The rating agency said in a release that the move takes into account Genesis' combination with a housing association with a stronger credit profile, as well as the intended increase in development and market sales targets. Moody's also noted that Notting Hill's relatively robust profitability will benefit Genesis' historically weaker margins.
The respective boards of both companies have already approved the proposed tie-up, which is expected to be completed in April.
