Level up your "LA to LA" trading with a Loan Ladder David Blake dblake@arlingclose.com

Figures released by MHCLG show the continued popularity of inter local authority funding; loans outstanding totalling £13.6bn at the end of December 2020. Authorities are borrowing portfolios of rolling short-term loans, benefiting from rates typically around 0.10% or less, with the flexibility to adjust debt levels as required. However, a few are getting bogged down with the administration involved in rolling over this type of portfolio. Others may want more certainty over the ability to refinance loans maturing within the next year or so.

Maturity Ladder

Potential solutions include adopting a strategic maturity ladder approach for core funding, combined with forward dealing. A maturity ladder allows authorities to pre-order loans using forward deals, reducing uncertainty and administration.  By placing orders for a basket of rolling maturities borrowers can stagger maturity dates and refinancing risk, but still benefit from lower rates at the short end of the yield curve:

iDealTrade has adjusted dealing parameters to allow users to keep a series of forward starting deals open for up to 365 days. So, borrowers can sit back and watch confirmed trades accumulate, with email notifications provided and details displayed on users “trade confirmation” page.

Online Dealing

Of course, it is still possible to actively manage the process online too, editing all aspects of open orders including, rates, dates and amounts, or cancelling orders as required. This approach allows authorities to target lower cost short-term rates while taking the uncertainty out of refinancing.

Online Trading Better for Borrower’s and Investors?

Online platforms like iDealTrade can help you save time and reduce risk. The platform is free to investors and borrowers pay just 0.03%, making it a low-cost solution too. If you would like to find out more, please visit idelatrade.net or contact us at support@idealtrade.net.

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