William Eichler 02 November 2018

Kent CC pays back LOBO loan early

Kent County Council has reached an agreement with Royal Bank of Scotland to pay back its LOBO loan debt early.

The council borrowed £60m from the bank between 2008 and 2011, with a 4% interest rate over the next 50 years.

These loans have now been paid back using a shorter-term Government loan at 2.5%, with a £13.4m premium paid to end the contract early.

Due to changes in accounting requirements, some banks are looking to reduce their Lender Option Borrower Option (LOBO) portfolios.

Kent CC explained that they were concerned RBS might sell their debt to a third party that might not exercise the ‘Lender Option.’ This would tie the council into a very long debt. 

‘If we were able to prepay, it would enable us to manage our debt more flexibly and reduce long-term financing risk,’ a council statement said before the final decision to pay back the loan was taken.

‘If the prepayment terms are sufficiently favourable we would explore options to refinance the debt at a lower interest cost which would result in a net revenue saving.’

‘We are only likely to proceed if the saving from the difference between current financing and alternative refinancing is greater than this premium, creating a net saving on the council’s budget,’ the statement added.

What’s happening inside the LGPS? image

What’s happening inside the LGPS?

Get the most informed take on the challenges and opportunities that substantial reform will bring at this year’s PLSA Local Authority Conference.
SIGN UP
For your free daily news bulletin
Highways jobs

Registered Building Inspector (Band 2/Grade 7)

Health and Safety Executive
£60,760 - £65,776
The Building Safety Regulator (BSR) is transforming building safety regulation across England. United Kingdom / various Locations
Recuriter: Health and Safety Executive

Revenues and Recovery Team Leader

Ashfield District Council
£37,938 - £40,476 per annum (pay award pending)
We have an exciting opportunity for a Revenues and Recovery Team Leader Sutton-In-Ashfield, Nottinghamshire
Recuriter: Ashfield District Council

Housing Options Officer

Ashfield District Council
£31,067 - £33,366 per annum (pay award pending)
Do you want to make a real difference to the lives of residents in housing need? Sutton-In-Ashfield, Nottinghamshire
Recuriter: Ashfield District Council

Building Services Operative

Ashfield District Council
£25,584 - £27,269 per annum (pay award pending)
The Facilities team are looking to recruit an enthusiastic individual Sutton-In-Ashfield, Nottinghamshire
Recuriter: Ashfield District Council

Street Cleansing Technician (CDC)

City Of Doncaster Council
Grade 5, £24,397 per annum (pay award pending)
Do you enjoy working outside, as part of a team that make a direct difference to the communities of Doncaster? Doncaster, South Yorkshire
Recuriter: City Of Doncaster Council
Linkedin Banner