THE Mayor of London Boris Johnson has launched a £600m bond to finance the construction of Crossrail.
Issuing the bond will help the Greater London Authority (GLA) fund its £4.1bn investment in the £14.8bn project to build the new rail link, which will connect east and west parts of the capital.
London will be the first local authority to raise finance using the capital markets in 17 years.
Tapping public debt markets will save the GLA some £65m in borrowing costs and equates to a year’s revenue from the Business Rate Supplement, a levy on business owners to fund the project.
The bond, put together by Lloyds Bank Corporate Markets, will allow for capital to be raised 0.17 per cent cheaper than the current option.
“This is a great example of the public and private sectors coming together and delivering an innovative solution to bear down on borrowing costs,” the Mayor said.
MEET THE ADVISERS
Andrew Géczy, chief executive of wholesale markets and co-head of corporate markets, led the team that designed the bond for the GLA.
Géczy joined Lloyds Banking Group in 2009 after 24 years’ senior corporate and investment banking experience. He began his career in public accounting with Price Waterhouse in 1986, before moving to Paris with KPMG Peat Marwick.
Géczy started his banking career in capital markets with Citibank in Paris where his main focus was on cross-border transactions involving Europe and the US and was appointed global head of structured corporate finance in 2003.
Glen Manning, senior director, and James Garvey, managing director at Lloyds TSB, were also involved in the GLA Crossrail deal.
Géczy said said the framework created for the GLA could be adopted by other local authorities across the country looking to raise capital.