bond agency happy with ratings _ room 151
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BY COLIN MARRS IN TREASURY — 21 JAN, 2016
Bond agencyhappy with ratings
The long-awaited
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municipal bondsagency has beenformally assessedby two ratingsagencies and isready to issue its�rst bond,according to theman running theproject.
In an interviewwith Room151,Aidan Brady, chiefexecutive of theLocal CapitalFinance Company,expressedhappiness withthe ratingsachieved.
He said that theagency was readyto approach themarket as soon ascouncils wantingto borrow havegone throughinternal approvalprocesses.
He said: “We areready to go today.If I had 10 or 15authorities sittinground this tabletoday with theirdocuments wewould be in themarket andissuing a bond in a
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few weeks,potentially.”
Brady said thatthe �rst issuewould be belowthe current PWLBrate.
However, Bradywas reluctant tocommit himself toan expected datefor the �rst bondissue, the agencyhaving alreadymissed its originaltarget.
He said: “We arenow dependenton the speed thatlocal authoritiesmove. Thedocumentationprocess has beenrightly rigorousand valuable andworthwhile, buthas taken longerthan we expected.I don’t think wewant to holdourselves hostageto fortune again[to anotherdeadline].”
Brady would notreveal the ratingsachieved by thebond agency, but
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said that he was“happy enough”with theassessmentsgiven.
He said: “We can’ttell you what theratings arebecause they areprivate ratings.When you arelooking to issuedebt what you willdo is wait until youare about to issuethe debt until youannounce therating.”
He described theprocess ofassuring ratingsagencies aboutthe robustness ofthe business planas “rightlyrigorous”.
“The starting pointis it is quite asimple story totell,” he said. “Butwe needed to takethem through theminutiae of localauthority �nance.
“You also have toexplain inabsolute minutedetail the
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operation of theagency down tothe timing ofwhen paymentswill go in and willgo out, whathappens if apayment doesn’tcome in.
“It is a verycomplex anddetailed process.”
Brady said thatcouncils looking toborrow from theagency are nowgoing throughinternal processesof approvalfollowing thecompletion of aframeworkagreementcovering theterms of lending.
Brady said: “Weworked with threecouncils tonegotiate that andit was a verythorough andrigorous process.That completedliterally daysbefore Christmasso we got itdistributed to our56 shareholdersand other councils
settlement slammed, new direct lending
fund, Brexit fears for treasury
we have beentalking to justbefore the break.They are nowtaking it throughtheir individualprocesses.
“They can approvethe agreementsnow. They don’tgo onto the jointand severalguarantee until weare ready toadvance cash tothem.”
He added that the�rst bond issuewas on course toensure cash lentto local authoritieswas not going tobe above thecurrent rate ono�er from thePublic Works LoanBoard.
“We have alwaysknown we canbeat that,” he said.
Look out for a fullerversion of thisinterview withAiden Brady andLocal CapitalFinance Companychairman SirMerrick Cockell
NewcastlejoinsSMElendingplatform
15 MAY,
2014
Treasurer’sreflections– Q1:Cyprus&PWLBrates
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Q&AwithBrent’sConradHall onLOBOs
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next week.
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