Trust for Urban Housing Financing (TUHF Ltd.), with the assistance of Standard Bank, have launched South Africa’s first social bond listed on the JSE with the proceeds directed towards inner-city affordable housing projects.
The bonds were issued by Urban Ubomi 1, an asset-backed security structure administered by TUHF.
Johannesburg based TUHF finances property entrepreneurs in their purchase and refurbishment of affordable rental properties. The company, through Urban Ubomi 1, raised R609 million in bonds that were listed on the Sustainability Segment of the JSE on the 23rd of March 2021, with Standard Bank acting as the sole arranger.
The bond issuance is a continuation of TUHF’s strategy to eliminate funding as a constraint to entry and growth for new property entrants and, to better align the maturities of its assets and liabilities.
The social bonds were issued in line with TUHF’s Sustainable Bond Framework which has developed with the assistance of Standard Bank and which have subsequently been independently verified by ISS ESG.
TUHF’s Sustainable Bond Framework is closely aligned to the UN’s Sustainable Development Goals, having a significant contribution to the eradication of poverty, the adopting of affordable and clean energy, enabling decent work and economic growth, ensuring cities and communities are sustainable and climate action.
The proceeds of the bonds improve access to funding for small businesses – in particular, previously disadvantaged property developers – and increase the supply of well-located affordable housing.
“Standard Bank is proud to have assisted TUHF with its first social bond issuance, which reflects growing interest in sustainable finance solutions as corporates and investors increase their focus on environmental, social and governance (ESG) considerations,” says Marc Hearn, Executive, Debt Capital Markets at Standard Bank Group.
“Long-term sustainability is linked to the wellbeing of the communities and environment in which they operate. We expect many companies will follow in its footsteps as they look to tackle social issues.”
“We are proud to have been able to arrange this landmark transaction for TUHF and to further enable them to provide financing for much needed inner-city residential development,” says Nicholas Gunning, Senior Manager, Debt Capital Markets at Standard Bank. “The listing of the bond in South Africa is a significant leap forward for the market and we are proud to be associated with it,” he adds.
“We are excited and humbled to partner with Standard Bank, our advisors, and arrangers, in developing and listing South Africa’s inaugural Social Bond. The bond recognises the impact TUHF makes in the lives of ordinary South Africans” comments Ilona Roodt, Chief Financial Officer at TUHF.
“In the eighteen years that we have been operating in this niche, sustainability in all three dimensions – financial, environmental, and social – has emerged as a key determinant of our long-term business success. We consider these to be important long-term measures of success for property finance and a key differentiator to attract investors active in the capital markets. TUHF’s objectives of inclusive growth and transformation are incorporated in TUHF’s social bond, which neatly codifies TUHF’s operations since inception. The Sustainable Bond Framework will be an important way that TUHF can further build its credibility in the capital markets, as a commercially competitive Financial Services Company while continuing to build relationships with the investor community aligned to these shared social concerns”.
In 2020, worldwide sustainable debt issuances surged 29% to $732.1 billion, according to BloombergNEF. With the Covid-19 crisis exacerbating societal challenges, social bonds accounted for much of the growth, with issuances rising sevenfold to $147.7 billion. Social bonds raise capital for social objectives including but not limited to employment creation, access to essential services such as healthcare and education.