William Eichler 02 November 2018

Kent CC pays back LOBO loan early

Kent CC pays back LOBO loan early image

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.

SIGN UP
For your free daily news bulletin
Highways jobs

Education, Health and Care (EHC) Co-ordinators

Buckinghamshire Council
£30,874 - £37,188 per annum
Interested in a career as an EHC Coordinator? Come along to our drop-in event to meet members of the SEND team and find out more about the role! England, Buckinghamshire, Aylesbury
Recuriter: Buckinghamshire Council

Head of the Gloucestershire Pension Fund

Gloucestershire County Council
up to £71,376
Give your time and talent for the people who gave us theirs. Gloucestershire
Recuriter: Gloucestershire County Council

Head of Quality, Performance and Systems

Norfolk County Council
£65,817 - £73,638 per annum
Children’s Services in Norfolk are on a rapid upward trajectory. Norwich, Norfolk
Recuriter: Norfolk County Council

Social Worker - Youth Offending Team

Essex County Council
Negotiable
This post is based in Epping Please ensure you provide a supporting statement when applying for this role. We cannot accept any applications without England, Essex, Harlow
Recuriter: Essex County Council

SEND 16-25 Officer

Sandwell Metropolitan Borough Council
£29,636 - £33,799 per annum
An exciting opportunity has become available in a busy Special Educational Needs team. Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Local Government News

Latest issue - Local Goverrnemnt News

This issue of Local Government News explores how councils can tackle modern slavery and trafficking in their supply chains, finds out more about Cambridge's first cohousing scheme and the launch of a new project to build a shared service pattern library for local government.

This issue also contains a special focus on children's services and how councils are protecting children following local safeguarding children boards being abolished.

Register for your free magazine