Bond agency will help councils
Author: Dan Peters, The MJ |
The Local Government Association’s (LGA) municipal bonds agency will help local authorities secure funding more easily and cheaply, new research suggested.
Deutsche Bank’s European Union monitor gave a largely positive appraisal of the financial agency, which has been formed in response to the increased inflexibility and price of borrowing from the Public Works Loan Board.
It is hoped that the agency will boost investment in infrastructure, the monitor said.
The agency plans to offer joint and several liability or a guarantee from the participating authorities in order to obtain a triple-A rating.
Deutsche Bank said the European sub-sovereign bond market had been dominated by German government authorities to date.
But a municipal finance agency established in France at the end of last year is set to place its first bond in the market at the end of this year.
The monitor read: ‘It remains to be seen how the importance of these agencies [in France and the UK] will develop and how the municipalities will tap their resources over the next few years.’
LGA chair Cllr David Sparks said 33 councils had already committed to investing £3.5m, beating the target for investment by a factor of nine.
Watford BC is among the latest councils to decide to back the agency, with a £20,000 investment.