Swindon Borough Council has said that it is thinking of joining the borrowing framework of the UK Municipal Bond Agency (UK MBA).
The proposal is contained in the council’s Treasury Strategy Statement 2019-20.
The UK MBA, which is wholly owned by the Local Government Association and 56 local authorities, aims to provide an alternative to funding from the Public Works Loan Board (PWLB).
The framework requires participating authorities to enter into a joint and several guarantee to cover a default by one of the participating authorities.
It also incorporates a mechanism to prevent the guarantee being called upon in the first place, by requiring its borrowers to lend the agency money to cover the default of another authority.
Swindon’s strategy statement says: “The council has limited sources of capital finance available to it.
“The margin charged by the PWLB rose significantly in 2010 and therefore the LGA explored and then, with the support of a number of local authorities, established the agency as an alternative to the PWLB.”
The council needs to borrow £116.5m over the next three years.
It will use the UK MBA if it can save money by doing so, and it cites the bond agency’s business case which suggest it could deliver savings of 20bp.
