Project team appointed to prepare bonds agency
An interim project team of capital market professionals has been appointed to prepare the UK’s first municipal bonds agency, following a successful first round of fundraising.
More than £4.5m has so far been raised to get the agency off the ground with 38 councils joining the Local Government Association as investors. This has significantly exceeded the target set for the initial fundraising and takes the agency well over half way to the full amount of capital required. Local authorities will continue to invest in the agency throughout the rest of this year to complete the raising of capital.
An inaugural meeting of future shareholders in the agency – which will trade under the name Local Capital Finance Company (LCFC) Limited – is to be held next week on Wednesday 17 September.
A business case for the bonds agency, published by the LGA earlier this year, showed that the agency could save more than £1bn in borrowing costs for councils investing in new infrastructure like homes, roads and business hubs.
The agency’s first bond is targeted for April next year.
Michael Lockwood, executive director of the LGA, and director of the LCFC, said:
“All types of councils from all over England have thrown their support behind the bonds agency. There is a genuine sense of excitement about the progress made so far and the momentum is building up as we prepare for the agency’s official launch.
“The amount invested in the agency so far has exceeded the initial targets required to make it a feasible proposition. We’re now in the crucial final phase where we start the process of turning these ambitious plans into a reality.
“This company will be owned by local government and will have the single purpose of reducing councils’ long-term capital financing costs.
“There is still time for councils to become equity investors in the agency and we will be speaking to many more local authorities in the coming weeks.
“This is a great opportunity for councils and other pension funds to make significant savings by directly raising the money we need for new roads, housing and infrastructure.”
An interim team of capital market professionals has been appointed to take the agency through its next phase of development.
Aidan Brady, who was the lead advisor to the LGA on the project, has been appointed as the interim managing director of the company.
Markus Krebsz, interim chief risk officer, is a seasoned risk specialist with more than 20 years’ experience in global financial markets, particularly in ratings, structured finance and credit risk. Markus has worked on many high-profile projects with some of the largest financial institutions, multinational development agencies and governments. He is a member of the UN Economic Commission for Europe Group of risk management experts, advisor to the World Bank, regulatory authorities, central banks and previously the European Commission.
Tim Cavanagh, interim chief operating officer, is an experienced financial services professional, who has worked in markets, banking and asset management in the UK and overseas for both small and large institutions. Most recently he set up a regulated financial services company to capitalise on opportunities arising out of the market dislocation of 2008, including credit trading, restructuring advisory and project/programme management.
Christian Wall, a local government finance policy officer with a background in capital markets, has been seconded to the company from the Royal Borough of Kensington and Chelsea.