The Local Government Funding Vehicle (LGFV) is now more highly rated than the four major Australian banks with a Moody’s Aa2 rating compared to the Aa3 rating for the banks
$340,000,000 has been issued by the LGFV since 2014 across three tranches, accounting for approximately 30 per cent of the total Victorian Local Government debt
Thirty-three councils have participated in an issuance of the LGFV, with borrowing levels ranging from $55,000,000 to $150,000.
The LGFV was established by the MAV in 2014 at the request of councils to provide a cheaper source of funding.
In less than three years, the LGFV has issued approximately 30 per cent of the total Victorian local government debt, providing a lower cost of borrowing to metro, rural and regional councils and increasing competition in the market, which has resulted in reduced margins from the major banks.
The LGFV is rated Aa2 by Moody’s Investor Services, now more highly rated than ANZ, CBA, NAB and Westpac following a downgrading of these banks to Aa3.
The LGFV provides funding directly from capital market investors including super funds, insurers and asset managers, removing the middle man and has the capacity to issue green bonds and support social initiatives.
Issuance of future bonds
Following the successful launch of the LGFV in 2014 and the second issuance in May 2016, work has commenced preparing for the third issuance, anticipated for the May-July quarter 2018.
For further information, contact Cameron Spence.