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North British Housing Association is to build 1000 homes funded by one of the biggest-ever bond deals.

North British, the largest association in the Places for People Group, signed the 拢200m bond deal with HSBC, Dresdner Kleinwort Wasserstein and Royal Bank of Canada.

Steve Binks, finance director at Places for People, said: "We will use 拢140m to refinance existing bank debt, 拢10m to invest in debt service reserves and 拢50m for new projects over the next two years." The 拢50m will build about 1000 units over two years.

The bond was sold in the markets on 1 July and North British received the money yesterday. It must repay the funds by July 2024.

The all-in interest rate is 5.09% and the margin is 64 basis points . However, Binks added that the hedging on some parts of the deal would reduce the interest.

The bonds were rated Aa2 by Moody's and AA- by Standard & Poor's (HT 4 July, page 15).

The deal was structured by Dresdner Kleinwort Wasserstein, with Royal Bank of Canada and HSBC underwriting and distributing the bonds.

Charles Arbuthnot, director of Royal Bank of Canada, said North British had benefited from "some of the tightest pricing achieved by a housing association to date".

Graham Beazley-Long, managing director of capital markets origination at Dresdner Kleinwort Wasserstein, said it had started work on the deal in March.

Dresdner has undertaken two previous deals for North British: 拢100m in May 1998 and 拢105m in September 1995.

Royal Bank of Canada is the UK's biggest underwriter of social housing bonds with 拢1.5bn total proceeds. HSBC is second with 拢758m and Dresdner is fourth with 拢593m.

Places for People also pioneered a more unusual type of bond when it raised 拢5m from local people and organisations in Sheffield, Newcastle and London to put into training and employment projects.

After five years the investors get their money back but the interest is put into the training schemes (HT 23 January, page 13).