The NZ Local Government Funding Agency Ltd, set up in 2011 to sell bonds on behalf of member councils, is looking at issuing a 16-year bond in April.
Chief executive Mark Butcher said a bond maturing in 2033 would allow the agency to provide long-dated funding to councils with a better match to their long-dated assets.
It would extend the agency’s debt profile 6 years beyond its longest-dated bond at the moment, which matures in April 2027.
The agency’s bonds trade on the NZX debt market and are rated AA+ (domestic long term) by international credit rating agencies Standard & Poor’s and Fitch Ratings, the same as the Government’s rating.
The agency has issued $6.8 billion of bonds on behalf of its council members, with 7 maturities from 2017-27. However, chair Craig Stobo said in the half-year report issued in February the agency had issued only $595 million of long-dated bonds over the 6 months to December, adding: “While this is in line with statement of intent forecast, it is one of the lowest issuance amounts over a 6-month period, reflecting reduced borrowing demand from our council members.”
The agency has a bond tender scheduled for Wednesday 5 April and will release tender details 2 days earlier. If it decides to proceed with the 2033 bond, it will release details of that on Tuesday 4 April.
Attribution: Company release.