Birmingham looks to woo private investors after £45m funding deal

Birmingham City Council has had its reliance on Central Government funding eased with a new £45m finance deal.

The council has tied up a deal with Lloyds Bank Commercial Banking for the multi-million bilateral placement and is hoping the move will make the city a more attractive proposition for investors.

The transaction, funded by a single institutional investor, will help to diversify Birmingham’s long term funding away from Westminster bodies and into the private sector.

It will most likely be used to support new housing schemes.

The money will be funded across three tranches of £15m with maturities of 18, 20 and 24 years. The package realises an interest saving of £1.4m against equivalent Public Works Loan Board (PWLB) rates.

Lloyds Bank Commercial Banking supported the transaction from origination through to execution.

Birmingham City Council leader, Cllr John Clancy, said: “It has never been more important that councils look at radical and imaginative ways to replenish their finances. The path we have set out on, delivering private sector bonds, represents a confident act of local self-determination.

“This amounts to a vote of confidence in Birmingham from the private sector. Birmingham city council is well-run and a sound financial bet and I anticipate that other institutional investors will follow suit.”

Mitul Shah, Director, Institutional Solutions, Lloyds Bank Commercial Banking said: “These loans provide attractive risk-adjusted assets to the investor and also help in closely matching their long-term liabilities.

“Lloyds Bank’s Institutional Solutions team have worked closely with the investor to shape their proposition for UK Local Authorities enabling the team to facilitate this inaugural transaction as part of Lloyds Banking Group’s ‘Helping Britain Prosper’ ethos.”