Way opened for cheaper borrowing

Access to a potential saving of $40,000 on $10 million of debt has been facilitated as part of a review of the Queenstown Lakes District Council's Treasury Management Policy.

The council's liability management policy and investment policy review came before yesterday's finance and corporate committee meeting, seeking to enable QLDC's treasury activities to continue efficiently and in line with "market best practice".

A draft review was carried out by Bancorp Treasury Services Limited corporate service manager Miles O'Connor, to reflect the introduction of the Local Government Funding Agency (LGFA).

The LGFA is a funding vehicle set up to enable local authorities to borrow at lower-than-normal interest margins and was expected to be able to lend during the first quarter of this year.

If the QLDC were to borrow from the LGFA, modelling suggests a saving of $40,000 on $10 million of debt, provided it was also participating in the agency as a guarantor.

On the recommendation of Mr O'Connor, the committee moved to include the necessary wording to allow it to borrow from the LGFA if necessary.

The Crown will be a principal shareholder in the LGFA, providing an initial stand-by facility of $500 million through the Debt Management Office, with the intention to raise this to $1 billion.

 

 

 

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