Each fortnight, the council rolls over about $20 million for operational purposes, using a panel of representatives from the four main banks in a promissory-note tender process.
In a rare move last week, it was not accepted, until the council agreed to pay higher interest.
In a separate financial debt-raising process, its last bond issue, for $40 million in June this year and offering investors 8.7%, was fully subscribed.
It is being held to pay for deposits and settlements on the stadium land.
However, the Government's decision more than a week ago to guarantee bank deposits, but not the interbank wholesale lending, has left councils around the country facing the prospect of investors taking their cash to guaranteed borrowers, despite councils like the DCC having a higher credit rating in some cases, but not being guaranteed.
Council finance and corporate support general manager Athol Stephens said it was conceivable the council would have to pay higher interest in the future and the Government guarantee was causing some problems, prompting large institutional investors to reconsider investment.
At present, councils around the country have joined the list of non-guaranteed organisations waiting for a decision by the Government on whether it will follow Australia and extend the guarantee to cover wholesale lending.
Mr Stephens noted criticism the council was offering about 70 basis points (0.7%) above the guideline swap rate for investors, with the "inference" being it was paying investors too much and detracting from ratepayer returns, but he said yesterday a major bank bond offer a month earlier was offering 125 basis points (1.25%) above the going rate.
Dunedin city treasury chief executive John Knight said that even if there were no tenders for the fortnightly roll-over agreement, the council had "sufficient cash reserves of several million" to "see it past Christmas comfortably".
"The problem lies in the non-bank institutional investors not supporting [the fortnightly promissory note tender] programme; holding on to their cash," Mr Knight said.
He said there were no plans for another separate bond issue, but echoed Mr Stephens' sentiments that there were "several plans and options" available to council when a final decision was made in February about the stadium and it became clear how much funding was required.
If institutional investors were still holding their cash, or taking it elsewhere to guaranteed deposits, Mr Knight said there were wholesale issues to consider, private placement from the US or a retail bond issue to consider.
"Regardless, if we needed $50 million or $100 million, I don't believe it will be a problem," Mr Knight said yesterday.
It was reported yesterday that Auckland Airport's $80 million retail bond offer was fully subscribed a week after opening.
Mr Knight said the retail bond market "potentially could be tapped into".
While it meant dealing with a larger number of smaller investors, if it was offered in the council's name it would not require circulation of a prospectus, he said.
