Warrington Borough Council has issued a £150m bond deal, becoming the first UK local authority outside London to enter the bond market for more than ten years.
Approximately £50m has been sold to a UK insurance company while £100m has been retained by the council to provide access to future funding.
Warrington Borough Council said that the issue was similar to the £200m CPI-linked bond issued earlier in 2015 by the Greater London Authority, except that Warrington’s bond ensures that increases in the CPI-linked coupon are limited to 3 per cent per annum, and Warrington’s retained bonds provide future funding flexibility.
The bond was structured and placed by TradeRisks, a corporate finance firm that specialises in social infrastructure funding.
Under government rules, the council cannot use the bond proceeds to fund day-to-day expenditure, but will use it to fund its capital programme. The proceeds will be spent on asset and infrastructure within the borough of Warrington, and the bulk is expected to be used on the council’s £100m new town centre development in Bridge Street.
Warrington Borough Council forecasts that the initial £50m bond sale will enable the council to save up to £12m in interest costs over the term of its borrowing.