12 October 20

The pandemic has triggered a drive for 'good old fashioned banking'

When the Financial Times reported the first acquisition of an interest rate swap by a Local Authority late last week (https://on.ft.com/30Yt1T5) they noted that it was almost 30 years since the Hammersmith and Fulham ultra vires case that caused Councils to be barred from the derivatives market and the correspondent banks to lose more than £600m on the other side of the trades.

The fact that the first new transaction has occurred a full 9 years since the 2011 law reopened markets to them, suggests there has been an understandable level of trepidation, possibly from both sides. However, as so often happens, others will now likely be emboldened to follow Plymouth City Council’s lead in what the FT claims was a “hunt by UK Councils for new forms of financing after a decade-long funding squeeze”.

Another option might have been to consider older forms of financing, maybe even the one that’s reputed to be the oldest of all.

Leasing and Asset finance interest rates are at a historic low comparable with PWLB debt and there are experienced, responsible lessors capable of assuming competitive levels of residual value risk.

To learn more about Triple Point’s traditional lending and leasing to a modern economy click here - https://bit.ly/3nPmdBd