The ratings agency said that it expects THFC’s management policies and governance standards to continue to support the company’s robust capitalization and strong funding and liquidity ratios.

S&P also affirmed an ‘A’ long-term and ‘A-1’ short-term issuer credit rating on its new £2bn sustainable finance vehicle, which was launched in March 2023.

The agency said that despite difficult economic conditions, THFC’s conservative risk management practices will allow the aggregator to withstand high inflation and pressures across its social housing borrowers.

S&P highlighted the strength of THFC’s £8.13 billion loan book, which represents 7.8% of the social housing sector’s debt. The agency also noted the low industry risk of the UK social housing sector overall.

S&P expects the UK social housing sector in general to face increased costs caused by inflation and the need to hit energy efficiency and fire safety targets which, together with elevated interest rates, could result in financial and debt metrics weakening across the sector. But they believe THFC’s prudent risk management policies will likely help mitigate the pressure coming from the weakening credit quality of the social housing sector in the UK.

Arun Poobalasingam, funding and marketing director of THFC, said: “Today’s announcement from S&P is an encouraging endorsement of our core business at a challenging time for many industries.

“The social housing sector as a whole continues to face serious challenges relating to building safety, cost inflation and higher interest rates. Of course, borrowing has become more expensive, but we are committed to helping our borrowers deliver on their commitments to build more affordable housing.

“This latest assessment from S&P puts THFC in a strong position to support the sector going forward and we look forward to providing funding for those who need it.”