City looks to external borrowing for first time
0The City of London Corporation has said in its Draft Capital Strategy that it will borrow for the first time from external sources in order to finance its large current infrastructure initiatives.
The corporation’s latest budgets state that it could borrow more than £1bn during the next three years.
Its financial activities are divided into three arms: the City’s Cash – its endowment fund; the City Fund which is carries out its more traditional local authority and police functions; and the Bridge House Estates Trust, which is a charitable trust originating in the need to maintain London Bridge, and which supports charitable causes, environmental initiatives and social investment.
The latter’s capital plans have been excluded from the Draft Capital Strategy, pending the outcome of the Bridge House Estates Governance review.
The City is engaged in four major projects: the relocation of the Museum of London, the consolidation of the area’s markets, and the construction of a concert hall, and of a combined courts building.
The strategy says: “These projects represent a substantial funding requirement of unprecedented scale in the context of the City Corporation’s more recent capital plans.
“They therefore present a significant challenge to the finances of the organisation, requiring a step change in the previously debt-free status of the both City Fund and City’s Cash.”
The Corporation has authorised £241m of borrowing for the City Fund for 2019-20, which will rise to £513m by 2021-22.
The City’s Cash has a borrowing limit of £356m for 2019-20, which increases to £528m by 2021-22.
The City Fund will probably borrow from the Public Works Loan Board (PWLB), while the City’s Cash could turn to banks and other private investors.
