The Local Government Funding Authority (LGFA) has just issued its sixth bond tender which has bought issuance to date past the $1b mark.
The LGFA was incorporated on December 1st 2011 and aims to provide more efficient funding costs and diversified funding sources for shareholding local authorities. The Government, Hastings District Council, and 17 other councils from around the country are the initial shareholders in the LGFA.
Earlier this year, Hastings District Council took a $15m, seven year loan with the LGFA to fund infrastructure and capital works programmes and renew existing borrowings. This loan was secured at a margin that is significantly lower than council would have achieved, had it gone to the capital markets in its own right.
Chief Financial Officer Tony Gray says “The latest bond issue by the LGFA is another significant milestone for the organisation. It was expected that they would hit the $1b dollar mark at some time during the 2012 calendar year but this has been achieved in just eight months of operation.”
Mr Gray says “16 councils have now borrowed from the LGFA and it is expected that other councils will look at participating in future bond tenders. Investors are also looking very favourably at the LGFA as margins tighten in other investment areas.”