Social bonds could become an asset class of their own, top lawyer says

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Allens has helped a longstanding client clinch one of the first loans funded by a pioneering social-bond issue, which could mean the start of social bonds becoming an asset class of its own.

The top firm advised Evolve Housing on a 10-year, $70m facility provided by the federal government’s National Housing Finance and Investment Corporation (NHFIC). The corporation raised $315m in March, which it said is Australia’s largest-ever issuance of social bonds.

“The loan facility with the NHFIC leverages the government bond rate, to provide cheaper and longer-term financing than Evolve could otherwise access on the market,” said banking and finance partner Jo Folan, who headed the Allens team.

“We are seeing strong investor interest in social bonds, and there are signs to suggest that affordable housing could grow into an asset class of its own, alongside green buildings, low carbon transport and renewable energy in capital markets,” she said.

Senior associate Edward Chuah and lawyer Kate Buchanan also acted on the deal.

The transaction means Evolve has become one of the first community-housing providers to receive a loan funded by the NHFIC’s first social bond issue. The issuance will fund 10-year interest-only loans with a fixed rate of 3%, which is well below current rates. In addition to Evolve, first recipients of the loans include BlueCHP, CHL, Compass, Hume, and Unity.

Evolve, which is one of the largest community-housing providers in Australia, will use the loan to refinance existing debt facilities and support its ongoing activities in providing affordable housing and social support programs, Allens said.