Market Perspective 02/10

Loan to value continues to look unhelpful and the shortage of equity and debt players continues.  As RSLs look to protect their back loans book from renegotiations, bonds continue to be the main alternative route to which RSLs look for refinancing.  Since only a few companies such as THFC and Nationwide provide aggregation services to allow smaller RSLs to deal in the bond market (traditionally running a minimum issue of about £100m+), many are finding it increasingly difficult to meet the existing debt interest, yet alone grow their business at the current time.  

Add to this several hundred sites stalled or perhaps spluttering back to life around the country from the prime developers, rumours of a possible double dip to this recession and the forthcoming lack of government finance for affordable housing and you get a flavour of why we believe the private equity investment model’s time has arrived. Can the C4H model tempt some new players? Time will tell.