Abhishek Sachdev, MD of Vedanta Hedging, was interviewed by BBC Radio 4 about the risky LOBO loans sold to Councils.
In this interview, Mr Sachdev (himself a Councillor and also Audit Committee Chairman at Hertsmere Borough Council), explained that he believes no councils should have entered into LOBO loans. The main reason for this that he does not believe that any Councillors or Council Finance officers could truly understand the key risks of complex LOBO loans (which contain embedded Bermudan Multi-callable options).
Mr Sachdev also made the point that Councils were working hard to make efficiency gains in many areas, but these savings were tiny compared to the costs of LOBO loans.
The BBC news piece can be listened to here (from 1 min to 9:40)
Mr Sachdev has spoken at length about the dangers of LOBO loans, which – crucially – were (or should reasonably have been) known before councils across the UK locked themselves into such long-term contracts. Abhishek told the BBC that “ there is a reason why none of our large PLC corporate clients would ever enter into such a loan”. For more information, please see the Channel 4 documentary here and Abhishek’s earlier BBC News & Radio interview here.