Council issues first bonds - positive results

 The Queenstown Lakes District Council has successfully raised $30 million through issuing wholesale bonds on the capital markets, QLDC finance general manager and deputy chief executive Stewart Burns said.

The concept of issuing bonds was first flagged publicly in the 10-Year-Plan and Mr Burns was instructed by the council’s finance committee in August, this year, to proceed with issuing the bonds on a wholesale basis.

“The funds will be drawn down in three $10 million parcels in October 2009, December 2009 and February next year. These are the first bonds issued by the council and it is very pleasing to see that the market reacted positively to the offer,” Mr Burns said.

Investors had shown confidence in the QLDC ‘name’ investing for periods of three, four or five years, he said.

“From a ‘cost of funds’ perspective, the decision to issue bonds rather than to rely on traditional bank loans has been fully justified,’ Mr Burns said.
The council estimated the overall savings in interest costs for the $30 million raised to be in excess of $800,000 over the terms of the bonds, when compared to existing rates for fixed rate term loans from banks.

“It is very important that council has certainty with its funding arrangements and the decision to diversify its financing options has provided this certainty as well as a significantly lower overall cost of borrowing,” Mr Burns said.