A £1bn infrastructure project that will link Battersea to the London Underground is another step closer due to a pioneering new method of financing agreed between the Greater London Authority (GLA) and Lloyds Bank Commercial Banking. It has been confirmed that the United Kingdom’s first ever Consumer Price Index-linked Sterling bond has been issued in a £200m deal that will contribute to the cost of the new Tube link.
The bond was developed by Lloyds Bank Commercial Banking and is a first in the Sterling bond market. It has enabled the GLA to raise finance in the most cost effective manner, and by taking this approach the Authority is expected to deliver the best possible value for Londoners by potentially saving up to £40m over the next 25 years.
An extension to the Northern Line is essential to the regeneration of Vauxhall, Nine Elms and Battersea and will lead to the creation of 24,000 jobs and 18,000 new homes.
Working with Lloyds Bank Capital Markets team, the GLA was able to hold a competitive dialogue with Sterling institutional investors and concluded that it was better value-for-money to issue bonds linked to CPI, rather than the traditional Retail Price Index.
The Mayor of London, Boris Johnson, said: “This deal demonstrates the continuing lure of London to investors with an eye for a world-leading transaction. These wise heads realise the incredible potential of our city and my team will draw on every possible source of funding in order to ensure the mega infrastructure projects we need to continue to thrive are able to move off the drawing board and into reality.”