The Riverside Group Limited (Riverside) has completed what is thought to be the housing sector’s first loan facility using the Sterling Overnight Index Average (SONIA) interest benchmark.
The deal, which sees the restatement of Riverside’s existing facility with Lloyds Banking Group, includes a £100m revolving credit facility indexed exclusively on a SONIA basis.
It is the first known fully operational facility in the sector where the interest rate is indexed to a risk-free reference rate. This helps to ‘future-proof’ the credit line, following the Financial Conduct Authority and Bank of England announcement that the London Inter-Bank Offered Rate (LIBOR) will be discontinued from the end of 2021.
Gary Grigor, banking partner at Devonshires advised Riverside on the agreement.
Carol Matthews, Group Chief Executive of Riverside says: “In these difficult times, our key focus remains providing the best service possible to our customers and ensuring that both they and our colleagues are safe. Having access to the funds we need to run our business in a different way underpins our ability to do this. At Riverside, we’ve always prided ourselves on moving proactively so that we are ready to meet whatever challenges we face. Being the first registered provider to secure a facility using the SONIA rate is a testament to that.”
Cris McGuiness, CFO of Riverside says: “We are grateful to our funding partners at Lloyds, particularly Paul Stanley, for embracing the opportunity to enter the RCF on a SONIA basis and for continuing to provide liquidity in times of uncertainty. We hope that our input into the SONIA mechanics will help pave the way for other registered providers and social landlords in the future.”
Gary Grigor, banking partner at Devonshires, says: “Having toured the country over the past 18 months to advise treasury groups and conference delegates on the new interest rate mechanics, I’m delighted to have advised Riverside on this new facility and put the theory into practice. The new arrangements don’t come without their challenges and so now more than ever it’s important that all RPs and RSLs engage with experienced lawyers to plan for the implementation of the new arrangements for their business.”