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Bond agency happy with ratings _ Room 151
1. BY COLIN MARRS IN TREASURY — 21 JAN, 2016
Bond agency
happy with ratings
The long-awaited
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municipal bonds
agency has been
formally assessed
by two ratings
agencies and is
ready to issue its
rst bond,
according to the
man running the
project.
In an interview
with Room151,
Aidan Brady, chief
executive of the
Local Capital
Finance Company,
expressed
happiness with
the ratings
achieved.
He said that the
agency was ready
to approach the
market as soon as
councils wanting
to borrow have
gone through
internal approval
processes.
He said: “We are
ready to go today.
If I had 10 or 15
authorities sitting
round this table
today with their
documents we
would be in the
market and
issuing a bond in a
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few weeks,
potentially.”
Brady said that
the rst issue
would be below
the current PWLB
rate.
However, Brady
was reluctant to
commit himself to
an expected date
for the rst bond
issue, the agency
having already
missed its original
target.
He said: “We are
now dependent
on the speed that
local authorities
move. The
documentation
process has been
rightly rigorous
and valuable and
worthwhile, but
has taken longer
than we expected.
I don’t think we
want to hold
ourselves hostage
to fortune again
[to another
deadline].”
Brady would not
reveal the ratings
achieved by the
bond agency, but
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said that he was
“happy enough”
with the
assessments
given.
He said: “We can’t
tell you what the
ratings are
because they are
private ratings.
When you are
looking to issue
debt what you will
do is wait until you
are about to issue
the debt until you
announce the
rating.”
He described the
process of
assuring ratings
agencies about
the robustness of
the business plan
as “rightly
rigorous”.
“The starting point
is it is quite a
simple story to
tell,” he said. “But
we needed to take
them through the
minutiae of local
authority nance.
“You also have to
explain in
absolute minute
detail the
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5. operation of the
agency down to
the timing of
when payments
will go in and will
go out, what
happens if a
payment doesn’t
come in.
“It is a very
complex and
detailed process.”
Brady said that
councils looking to
borrow from the
agency are now
going through
internal processes
of approval
following the
completion of a
framework
agreement
covering the
terms of lending.
Brady said: “We
worked with three
councils to
negotiate that and
it was a very
thorough and
rigorous process.
That completed
literally days
before Christmas
so we got it
distributed to our
56 shareholders
and other councils
settlement slammed, new direct lending
fund, Brexit fears for treasury
6. we have been
talking to just
before the break.
They are now
taking it through
their individual
processes.
“They can approve
the agreements
now. They don’t
go onto the joint
and several
guarantee until we
are ready to
advance cash to
them.”
He added that the
rst bond issue
was on course to
ensure cash lent
to local authorities
was not going to
be above the
current rate on
o er from the
Public Works Loan
Board.
“We have always
known we can
beat that,” he said.
Look out for a fuller
version of this
interview with
Aiden Brady and
Local Capital
Finance Company
chairman Sir
Merrick Cockell
