A housing association has turned to the bonds market in order to raise funds for new developments.

Hightown Praetorian and Churches Housing Association raised £27.5 million of unsecured debt with a bond issued by Retail Charity Bonds Plc - with a 4.4 per cent interest rate.

This makes it one of the first organisations of its kind to turn to retail charity investors in order to generate substantial finance, Inside Housing reports.

According to Canaccord Genuity, one of the organisations that created Retail Charity Bonds plc, unsecured debt is a "very attractive" option for Hightown as it has "got a big development programme against its size".

Despite an announcement by the Conservative Party to extend the Right to Buy programme to housing association tenants, the issue was oversubscribed and closed early. 

The idea has proved highly controversial among many stakeholders and Canaccord Genuity believes it is responsible for a drop in investor appetite over the last few days.

Adrian Bell, head of debt markets UK at the group, said "appetite for housing association paper fell off a cliff last week", with some taking the view that "if you can avoid taking a risk, why would you take it?"

He added that the decision to close early was also taken "because we had as much as they wanted".

Louise Leaver, head of Social Housing Finance at Winckworth Sherwood LLP, who advised Hightown on this bond issue commented: "This was an exciting opportunity for our client to raise substantial funds in an efficient manner by avoiding the need to charge properties and being able to take advantage of the capital markets at this level of debt through the Retail Charity Bond platform.”