• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Inter-authority lending appetite remains buoyant despite low PWLB rates

0
  • by Colin Marrs
  • in 151 News · Treasury
  • — 19 Sep, 2019

Twice as many councils predict an increase in borrowing from other councils next year as those forecasting a reduction, according to the 2019 Room 151 Treasury Investment Survey.

This year’s survey, which received responses from 148 senior investment figures working in local government, asked which types of investment councils expect to increase or decrease next year.

In response, 28.3% said that they would increase their investments with other councils, with 14.87% saying they would reduce their exposure to the sector.

In recent months, Room151 has reported on a number of local authorities which have taken advantage of cheap interest rates to swap short-term borrowing from other local authorities with longer term Public Works Loan Board debt.

Last month, Northamptonshire County Council borrowed £110m from the Public Works Loan Board to replace short-term borrowing.

The council took six loans during August at rates between 1.12% and 1.68% with maturity periods of between five and 50 years.

In March, a rise in borrowing from the PWLB was attributed to the low rates on offer.

Two of the biggest borrowers during the month – Woking Borough Council and Warrington Borough Council – told Room151 that they had used the money to push out the duration of portions of their debt.

However, the survey results show that appetite remains high among many councils for in the short-term LA-to-LA segment.

David Green, strategic director at treasury adviser Arlingclose, told Room151: “Local-to-local loans remain popular with borrowers, since interest rates remain cheaper than those offered by PWLB and are likely to fall in future.

“Lenders meanwhile like the security of investing within the sector rather than taking the risk of a bank failure, especially if the economy is slowing down.”

Among other significant trends in forecasts of council treasury staff, 18.9% said that they would be likely to increase investments in multi-asset funds.

Another 18.9% said that they would be increasing their investments in property or property funds during the next year.

More than a fifth of that number said saying they would be increasing property investments “significantly”.

Only 2.0% said they would be looking to reduce property investments.

Opinion was split on money market funds (MMF), with 20.1% saying they would increase their investments in this area, while 25% were looking to decrease their MMF portfolio.

The shift away from the low rates offered through banks and building societies also looks set to continue, with 29.0% saying they would reduce bank deposits and 16.2% saying they would reduce building society deposits.

However, another 14.2% said their authority would increase bank deposits and 6.08% are looking to put more money into building society deposits.

Perhaps unsurprisingly, given the pressure on local authority budgets and low interest ratees, only 6.8% of respondents said they expected to see their investment balance increase over the next five years.

Meanwhile, 62.8% expected to see falls, with 9.5% expecting a drop of more than 75%.

Speaking at Room 151’s Local Authority Treasurers Investment Forum this week, Peter Hugh Smith, chief executive of investment manager CCLA, said: “The majority of local authority assets – in excess of 75% – are in short term assets, which given where interest rates are, is giving a very minimal return.”

He also said that if a Brexit deal is reached with the European Union, interest rates could rise to 1.5% by 2021.

He said: “That is quite different from what the audience here expects as the most likely outcome.

“I am not saying it is the most likely outcome but we need to think about what we do if that happens.”

Get the Room 151 Newsletter

Room151 Conferences & Events

Share

You may also like...

  • Northants turnaround set to produce balanced budget Northants turnaround set to produce balanced budget 7 Feb, 2019
  • Councils anticipate cutting services to ‘legal minimum’ Councils anticipate cutting services to ‘legal minimum’ 9 Aug, 2018
  • Amundi Q&A: “Active and flexible” investment produces better returns Amundi Q&A: “Active and flexible” investment produces better returns 9 Apr, 2015
  • More Icelandic assets return as Jones prepares to bow out More Icelandic assets return as Jones prepares to bow out 11 Oct, 2012

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 1 day ago

    All three days of #LATIF & FDs' Summit are available on our webcast channel gotostage.com/channel/room151

    Room151 4 days ago

    FDs’ Summit experts defend councils as MPs label property investment ‘risky’: As Room151’s FDs’ Summit conference explores local government’s investment in commercial property MPs once again lable it a “significant risk to government”. Once again MPs… dlvr.it/Rr7lZx pic.twitter.com/jPvcZjDAS4

    Room151 4 days ago

    Global macro outlook: Virus versus vaccine: Sponsored article: Salman Ahmed argues monetary policy, a global vaccine rollout and fiscal stimulus are likely to put “upward pressure” on bond yields. Much like the latter half of 2020,[...] dlvr.it/Rr60nt pic.twitter.com/qsymBWmKmV

    Room151 5 days ago

    ‘Chasing yield’ not the best strategy as negative rates loom: Recent speculation that the UK may be heading toward negative interest rates prompts questions for treasury officers managing local authority funds at LATIF. Speculation is rife that the UK… dlvr.it/Rr3Mrj pic.twitter.com/wtxYAB20PO

    Room151 1 week ago

    Will new public procurement rules offer the best commercial results?: The government has issued a green paper on reforming procurement rules. Helen Randall and Rebecca Rees examine the proposals and argue they may not go far enough. The Cabinet… dlvr.it/Rqtw6T pic.twitter.com/9GiVTkL08U

    Room151 2 weeks ago

    The vaccine may help settle cash flows but inflation remains a risk: Sponsored article: Lauren Sewell examines the prospects for long-term borrowing as Brexit settles and vaccines are deployed against Covid-19. On the 9th October 2019 Whitehall sent… dlvr.it/RqZXCr pic.twitter.com/PzgOZOGQ0k

    Room151 2 weeks ago

    ESG in liquidity: Sponsored article: Gavin Haywood looks at the integration of ESG in Federated Hermes’ money market funds. Federated Hermes has over 300 public sector clients invested in our AAA rated money[...] dlvr.it/RqZX5f pic.twitter.com/E87sBXsay8

    Room151 2 weeks ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 2 weeks ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 2 weeks ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 2 weeks ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 2 weeks ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 2 weeks ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 2 weeks ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 2 weeks ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 2 weeks ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 1 month ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Councils eye collaboration on community bank plans
  • Next story MHCLG: Further action on borrowing for property investment to be ‘proportional’

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK