Preparations could be under way for the new municipal bonds agency’s first bond by the end of February next year, the Local Government Association has suggested.
The LGA confirmed that 48 councils had now signed up to invest following a second round of equity raising by the Local Capital Finance Company (LCFC).
The Association’s Executive has decided that there is now enough support among councils to move to the launch phase.
The participating councils – which include cities, unitaries, counties, districts and London boroughs – will have until March 2015 to finalise their equity investment.
Work will meanwhile begin on establishing the agency as an independent body with its own governance structure. The body will be accountable to its council shareholders and the LGA, the Association said.
Michael Lockwood, Executive Director of the LGA, and Director of the LCFC, said: “The decision to move into the launch phase is a significant and important step. It reflects the overwhelming appetite among local authorities for us to make this happen….
“There is no doubt about the support for a local government owned bonds agency that saves taxpayers money by making borrowing cheaper. We’re now entering the crucial final leg where we will be looking for councils to finalise their equity investment.”
The business case for the agency suggests that – with councils currently sourcing 75% of borrowing from the Public Works Loans Board – if half of the outstanding debt with the PWLB was transferred to the agency the saving to the local government purse could be between £1.2bn and £1.45 bn over 30 years.