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Criteria Update Directly Affects Only 5% Of Rated Social Housing Providers, Mostly In The U.K.

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).

Table 1

Rating Actions To Resolve The June 1st UCO Placements
Country Issuer Credit Rating/Outlook Rating Action
To From
Social Housing Provider

Société Anonyme de Construction de la Ville de Lyon (SACVL)

France A+/Stable/-- A/Stable/-- Upgrade

Philadelphia Hsg Auth

U.S. AA-/Stable/-- A+/Positive/-- Upgrade

Housing 21

U.K. A-/Stable/-- A/Stable/-- Downgrade

Octavia Housing

U.K. A-/Stable/-- A/Negative/-- Downgrade

Brisbane Housing Co. Ltd.

Australia AA-/Stable/A-1+ AA-/Negative/A-1+ Outlook revision

Gentoo Group

U.K. A-/Negative/-- A-/Negative/-- Affirmation

Home Group Ltd.

U.K. A-/Stable/-- A-/Stable/-- Affirmation

Wrekin Housing Group Ltd.

U.K. A/Stable/-- A/Stable/-- Affirmation

Elm City Communities (New Haven Housing Authority)

U.S. A+/Stable/-- A+/Stable/-- Affirmation
Structured Bond Transaction

Haven Funding Plc

U.K. A- BBB Upgrade

Housing Association Funding PLC

U.K. A- BBB Upgrade

Sunderland (SHG) Finance Plc

U.K. A- A- Affirmation

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).

Table 2

Additional Rating Actions In The U.K. Social Housing Sector Since June 1, 2021
Issuer Credit Rating/Outlook Rating Action
To From

Hyde Housing Association Ltd

A+/Stable A/Stable Upgrade

Accent Group Ltd.

A/Stable A+/Negative Downgrade

Peabody Trust

A-/Stable A/Stable Downgrade

Paragon Asra Housing Ltd.

A/Negative A/Stable Outlook revision

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."

Related Research

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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