Credit rating

Aa3 rating (BCA a2) – March 2013

On 25 February 2013, Moody’s downgraded the rating of Affinity Sutton to Aa3 from Aa2, following a reassessment of the potential provision of extraordinary support. The rating was also placed on review for possible downgrade as Moody’s continues to refine its view on the likelihood of extraordinary support.

On 23 March 2013 Moody’s reaffirmed the Group’s baseline credit assessment of a2 (previously referred to as 6). This has further demonstrated our strong financial position, well-diversified housing stock and experienced management team.

In particular, Moody’s noted the following:

The Aa3 issuer rating of Affinity Sutton Group (ASG) reflects (i) the strong regulatory framework governing English housing associations; (ii) the high proportion of revenues that ASG derives from government subsidies (housing benefit), which enhances the company's revenue stability; (iii) strong cash flows from a robust foundation of low-risk social-housing letting; (iv) moderate, albeit rising, debt-to-revenue ratio given strong cash holding; (v) robust governance and prudent budget planning; and (vi) our assessment of a high likelihood that the UK government (Aa1, stable) would act in the event that ASG faces acute liquidity stress. The rating also takes into account (i) manageable and potentially rising exposure to sales; and (ii) a manageable exposure to universal credit. ASG is rated in the upper end of Moody's-rated English housing associations, whose ratings span from Aa3 to A2. ASG's relative position reflects stronger margins and cash flows, lower sales and robust governance, but higher debt-to-asset ratio.