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Councils group together for new funding

Councils in the UK are grouping together in the midst of the current pandemic in an effort to raise hundreds of millions in debt. Up to 30 councils including Westminster City and Barnsley borough aim to issue bonds through the UK Municipal Bonds Agency (MBA). 

The government raised the interest rate on new borrowing from the Public Works Loan Board (PWLB) last year, in effect forcing councils to look elsewhere for cheaper and new debt. The MBA made its debut two months ago, raising £350m from investors for Lancashire County Council.

The bonds for the councils will range from 10 year to 45 year maturities, aiming to raise at least £250m for each council. The proposed target is structured so that each council is liable only for its own debt and can not be held liable for a default by another council. 

The new funding is certainly welcomed by local authorities that have had their central government funding reduced significantly and have also experienced the financial pressure from the effects of the Coronavirus. 

For the full Financial Times article, please click here

Vedanta Hedging has worked with local authorities, most recently Newham Council to provide debt advisory services. For more information on how we helped Newham Council, please click here.