Decision details

Cabinet Member approval sought to secure borrowing.

That the Cabinet Member for Finance, Property and Regeneration approved a total of £250m in forward rate loans from Phoenix and Rothesay, for drawdown over a three to four year period and noted that this represents a first tranche of forward borrowing with the total approved being £400m.

Reasons for Decision 

1.         The Council has agreed that one of the ways to mitigate the future interest rate risk is to arrange a deferred drawdown loan (or forward rate agreement), agreeing a loan now with a drawdown at an agreed date some years in the future. This will reduce interest rate risk and the interest costs of drawing down a loan now before it is needed (cost of carry). This was approved at Cabinet on 15 October 2018 as part of the capital programme.

2.         The alternative to forward borrowing would be to borrow now from the Public Works Loan Board (PWLB), but this would cost an additional £1.9m over the life of the loan in net present value (NPV) terms.