Abstract
This paper uses the twin metaphors of ‘gatekeeper’ and ‘gateway constructor’ as devices to explore the role of Credit Rating Agencies (CRAs) as intermediaries between global corporate finance and specific institutions – housing associations in England. The analysis utilises a financialisation framing, whereby the practices, logics and measurements of finance capital, increasingly permeate government, institutional and household behaviour and discourse. This paper examines how housing associations have increasingly resorted to corporate bond finance, partly in response to reductions in government funding, and in the process engaged with CRAs. Surprisingly little research has been undertaken on the role and function of CRAs, and their impact on the organisations they rate. The case of housing associations (HAs) is of particular interest, given their historical social mission to build and manage properties to meet housing need, rather than operate as commercial private landlords conversant with market-based rationales. A case study of the large London-based HAs draws on a narrative and financial analysis of annual reports, supplemented by semi-structured interviews with senior HA finance officers to explore how CRA methodologies have been internalised and have contributed to changes in strategic and operational activities. We conclude that CRAs act both as a gatekeeper to the financial markets but also as a gateway constructor for the financial markets to enter new arenas, such as the HA sector. This dual nature of CRAs is intended as our contribution to emerging debates about the nature, the practice and the impact of financialisation on public services.
Highlights
More than a decade after the 2008 financial crisis, housing remains a central social and public policy issue across many developed economies, with key indicators such as rising rent levels, new build completions being outstripped by demand and increasing levels of homelessness
We find that the accounting information included in the Credit Rating Agencies (CRAs) criteria become internalised by social housing providers, exerting a significant influence on their strategic decision-making
Three housing associations (HAs) have far not issued an own-named bond, with one deliberately adopting a strategy that includes business operations in another sector which result in a lower credit rating but which is important for their social mission
Summary
More than a decade after the 2008 financial crisis, housing remains a central social and public policy issue across many developed economies, with key indicators such as rising rent levels, new build completions being outstripped by demand and increasing levels of homelessness. Since 2008 major private house-builders have increasingly prioritised profit-making and dividend payments over increasing the volume of new-build properties (Archer and Cole, 2016). Home ownership is in long term decline in most developed economies (Forrest and Hirayama, 2015; Clarke, 2016); in England the proportion of owner occupiers declined for ten years from 2003, and has since flatlined (MHCLG, 2018). The private rented sector and, especially, social housing is overshadowed as a result of this unremitting focus on restoring homeownership (Wilcox et al, 2016)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
