Aa3 rating – November 2012
WM Housing Group’s first credit rating was issued by Moody’s on 8th November 2012. The rating was positive confirmation of the Group’s financial strength, in particular Moody’s noted:
The Aa3 issuer rating of WM Housing Group (WMH) reflects (1) the strong regulatory framework governing English housing associations; (2) the high proportion of revenue that WMH derives from government subsidies (housing benefit), which adds to the company’s revenue stability; (3) strong, but weakening cash flows from a robust foundation of low-risk social-housing letting and limited sales; and (4) our assessment that there is a very high likelihood that the UK government (Aaa, negative) would act to prevent a default by WMH. The rating also takes into account (1) low, but increasing debt levels to support capital expenditure and its planned debt restructuring; (2) a manageable exposure to universal credit from welfare reform; and (3) governance constraints, reflecting legacy debt from recent acquisitions. WMH is rated in the mid-range of Moody’s-rated English housing associations, whose ratings span from Aa2 to A1. WMH's relative position reflects stronger margins and cash flows, minimal sales and lower debt levels, but a reliance on asset disposals to cover interest, a greater exposure to universal credit, and greater governance constraints from Large Scale Voluntary Transfer (LSVT) legacy debt.