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.
In both February and May 2013, Moody’s downgraded the ratings of almost all Moody’s-rated Housing Associations by one notch on each occasion. This meant our rating became A1 (from Aa3) in February 2013 and A2 (from A1) in May 2013. The Moody’s press releases for both February 2013 and May 2013 are contained within this section of the website.