This report does not constitute a rating action.
On June 1, 2021, S&P Global Ratings updated its "Methodology For Rating Public And Nonprofit Social Housing Providers" by introducing a regulatory framework assessment, shuffling the calibration of the rating factors to elevate the weight of management and governance and of liquidity in ratings on social housing providers. In addition, it provided a clearer explanation of how we evaluate the industry risks.
This led us to anticipate a potential rating impact on only nine out of the 86 housing providers rated at the time and three out of five structured finance transactions. Consequently, we placed the ratings on these entities and transactions under criteria observation (UCO) on June 1, 2021, and resolved all the UCO placements by Sept. 30, 2021 (see table 1).
|Rating Actions To Resolve The June 1st UCO Placements|
|Country||Issuer Credit Rating/Outlook||Rating Action|
|Social Housing Provider|
Société Anonyme de Construction de la Ville de Lyon (SACVL)
Philadelphia Hsg Auth
Brisbane Housing Co. Ltd.
Home Group Ltd.
Wrekin Housing Group Ltd.
Elm City Communities (New Haven Housing Authority)
|Structured Bond Transaction|
Haven Funding Plc
Housing Association Funding PLC
Sunderland (SHG) Finance Plc
Five of these nine social housing providers are in the U.K., where most of the publicly rated providers are based. In addition, all three of the structured finance transactions were issued by U.K-based issuers. We downgraded two U.K.-based entities and affirmed the ratings on three. Of the transactions, the ratings on two were raised, while the rating on one was affirmed.
Separate from the UCO resolution following the criteria update, we took rating actions on four other U.K. social housing providers (see table 2).
|Additional Rating Actions In The U.K. Social Housing Sector Since June 1, 2021|
|Issuer Credit Rating/Outlook||Rating Action|
Hyde Housing Association Ltd
Accent Group Ltd.
Paragon Asra Housing Ltd.
Many of the rating actions on U.K. social housing providers stem from a sharper focus on asset quality and consumer standards. Fire and building safety remediations have required entities to enhance their assets, and we anticipate that the push toward energy-efficiency targets, alongside investments in new development, will narrow the financial headroom on some entities.
That said, we view positively the measures some housing providers have taken to reduce their risk exposure and identify efficiencies and cost-savings that strengthen their ability to cope with the upcoming required additional investments.
Additionally, since the updated criteria, we have assigned ratings to France-based Toulouse Metropole Habitat O.P.H. (A+/Stable/A-1) and U.S.-based National Community Renaissance of California (A+/Stable).
Finally, following the social housing criteria update, we rate Swedish housing providers Hemso Fastighets and Willhem AB under our corporate methodology "Key Credit Factors For The Real Estate Industry." This is because the updated social housing methodology was no longer applicable, reflecting our view that the two entities' main mission is to maximize profits rather than provide a public service. We placed the ratings on these Swedish housing providers on CreditWatch negative on June 3, 2021. We affirmed the ratings on both entities on Sept. 2, 2021, and resolved the CreditWatch placements. Our credit analyses of these two entities incorporate the potential likelihood of extraordinary support under our "Group Rating Methodology."
- National Community Renaissance of California Assigned 'A+' Issue Credit Rating, Aug. 6, 2021
- Toulouse Metropole Habitat Assigned 'A+/A-1' Ratings; Outlook Stable, Sept. 28, 2021
- Regulatory Framework Assessment: Government-Owned, Public Policy-Focused Real Estate Companies In Sweden, Sept. 23, 2021
- Brisbane Housing Co. Ltd. Outlook Revised To Stable On Smaller Development Pipeline; Ratings Affirmed; Off UCO, Sept. 22, 2021
- Willhem AB (publ) 'A-' Ratings Affirmed Following Transition To Corporate Rating Methodology; Outlook Stable, 2, 2021
- Hemso Fastighets AB 'A-' Ratings Affirmed Following Transition To Corporate Rating Methodology; Outlook Stable, Sept. 2, 2021
- U.K.-Based Octavia Housing Downgraded To 'A-'; Removed From Under Credit Observation; Outlook Stable, Sept. 2, 2021
- U.K.-Based The Wrekin Housing Group 'A' Rating Affirmed; Removed From Under Criteria Observation; Outlook Stable, Aug. 20, 2021
- U.K. Social Housing Provider Home Group Ltd. Affirmed At 'A-'; Removed From Under Credit Observation; Outlook Stable, Aug. 20, 2021
- U.K. Social Housing Provider Peabody Trust Downgraded To 'A-' On Reliance On Nonrental Revenues; Outlook Stable, Aug. 20, 2021
- Elm City Communities, Connecticut; General Obligation, Aug. 12, 2021
- Sunderland (SHG) Finance PLC's U.K. Social Housing Bond Rating Affirmed At 'A-', Removed From Under Criteria Observation, July 27, 2021
- U.K. Social Housing Provider Gentoo Group Affirmed At 'A-'; Removed From Under Criteria Observation; Outlook Negative, July 27, 2021
- Philadelphia Housing Authority; General Obligation, July 26, 2021
- U.K.-Based Housing 21 Downgraded To 'A-'; Off UCO; Outlook Stable, July 23, 2021
- U.K. Social Housing Provider Hyde Housing Association Upgraded To 'A+'; Outlook Stable, July 22, 2021
- U.K. Social Housing Provider Accent Group Downgraded To 'A'; Outlook Stable, July 20, 2021
- Haven Funding PLC £131.5 Million Senior Secured Bond Rating Raised To 'A-'; Removed From Under Criteria Observation, July 7, 2021
- French Housing Operator SACVL Upgraded To 'A+' On Criteria Revision And Stronger-Than-Expected Performance; Off UCO, July 7, 2021
- U.K. Social Housing Provider Paragon Asra Housing Ltd. Outlook Revised To Negative; 'A' Rating Affirmed, June 23, 2021
- Global Regulatory Framework Report Card For Public And Nonprofit Social Housing Providers, June 8, 2021
|Primary Credit Analyst:||Abril A Canizares, London + 44 20 7176 0161;|
|Secondary Contact:||Felix Ejgel, London + 44 20 7176 6780;|
|Additional Contact:||EMEA Sovereign and IPF;|
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