WARRINGTON Borough Council has become the first UK local authority outside London to enter the bond market for more than 10 years.
The Council issued a £150m bond deal, of which £50m has been sold to a UK insurance company and £100m retained by the Council to provide access to future funding.
The issue was similar to the £200m CPI-linked bond issued earlier in the year by the Greater London Authority, except that Warrington’s bond ensures that increases in the CPI-linked coupon are limited to 3% per annum, and Warrington’s retained bonds provide future funding flexibility.
The bond was structured and placed by TradeRisks Ltd – a City corporate finance firm that specialises in social infrastructure funding.
Under government rules, the Council cannot use the bond proceeds to fund day to day expenditure, but will use it to fund its capital programme.
The proceeds will be spent on asset and infrastructure within the borough of Warrington, and the bulk is expected to be used on the Council’s £100m new Town Centre development in Bridge Street Warrington.
Warrington forecasts that the initial £50m bond sale will enable the Council to save up to £12m in interest costs over the term of its borrowing.
Councillor Russ Bowden (Portfolio Holder Corporate Services & Assignments) said: “This is a great example of the public and private sectors coming together and delivering an innovative solution to bear down on borrowing costs.
“I hope this is a model local government can develop. The bond structure has enabled us to save on our borrowing costs, diversify our borrowing portfolio and promote the new commercial ethos that the Council operates under.”
