This report provided an overview of treasury management activity for 2023/24 Quarter 1.
The report explained that the CIPFA (Chartered Institute of Public Finance and Accountancy) Code of Practice for Treasury Management 2021 recommended that Members be updated on treasury management activities at least quarterly. This report, therefore, ensured that the Council was implementing best practice in accordance with the Code.
The report set out that the Council’s debt maturity profile noted £54million of debt was scheduled to mature in the current financial year with an additional £100million of debt maturing in 2024/25. Investment performance remained in line with peer authorities, however, the Council was a net borrower which would restrict the cash available to invest.
In relation to the Lothbury Fund, which had suspended redemptions as it tried to sell the assets in a controlled manner, a Cabinet Member asked what the scale of redemption requests was compared to the overall size of the fund, whether the length of the suspension was known and how the planned restructure of the portfolio would be undertaken.
In response, the Leader of the Council said that a solution needed to be found by 31 December 2023 or else the fund would be wound up. A large number of redemptions had been made and an exact figure could be provided. The other funds that the Council had investments in, such as the CCLA, were recognised across local government and there were no suspensions of those at this stage. The situation with regards to Lothbury would be closely monitored.
With regards to Lender Option Borrowers Options (LOBO) loans, a Cabinet Member referred to the report that explained that one of the LOBO lenders had increased interest rates and the Council had therefore decided to repay one £5m loan. The Member asked what proportion of Council debt was held in LOBOs and the estimated financial impact on the Council if some of the other LOBO lenders followed suit.
The Leader advised that there was no indication from the market that other lenders were looking to exercise the option to change interest rates. LOBOs accounted for around £100million or 50% of the Council’s long term borrowing although this would change because of the Council’s redemption. There had been a strong focus on LOBO loans in recent years and if any other lenders did decide to change their rates, decisions on the relevant borrowing would then need to be made.
The Leader also noted the questions previously raised by the Audit Committee, which were included in the draft minutes set out in section 10 of the report.
The Cabinet noted the Treasury Management report, 2023 – 2024 quarter 1.
In accordance with the Chartered Institute of Public Finance Accountancy’s (CIPFA) Code of Practice for Treasury Management, there should be a report on treasury every quarter.