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BNY Mellon appointed trustee and paying agent on largest local authority bond in UK

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BNY Mellon has been appointed as trustee and paying agent on the largest ever bond issued by a local authority in the UK.

Aberdeen City Council’s GBP370 million transaction is also the first capital markets instrument to be issued by a Scottish local authority. The proceeds of the issuance will be placed with the council’s Capital Fund and used to fund capital expenditure programmes on vital infrastructure projects in Aberdeen.
 
Aberdeen City Council leader Jennifer Laing says: "It is a remarkable achievement by this council in securing this investment in the future of our city. Having already secured a credit rating from Moody's Investors Service at Aa2, the issue of the bond is another step forward by the Council in delivering a stable and fiscally prudent financial strategy that is both affordable and sustainable for the future – as demonstrated by investor confidence."
 
“We are looking forward to servicing Aberdeen City Council’s innovative issuance,” says Tom Ahern, head of corporate trust for EMEA at BNY Mellon. “This deal further establishes our leadership in trustee and agency services for the public sector which is a growth market for us. BNY Mellon has acted on two out of three UK local authority capital raisings and we are also paying agent on the majority of housing association bonds in the UK.”   
 
BNY Mellon will also act as calculation agent, common depository and tax administration agent throughout the life of this deal until final maturity in 2054. HSBC Bank acted as both the sole arranger and bookrunner on the financing.
 
The semi-annual coupon rate on Aberdeen City Council’s issuance is linked to the performance of the UK Retail Price Index (RPI) which includes mortgage interest payments. This is in contrast to most other inflation-linked bonds issued by local authorities and housing associations in the UK which are linked to the Consumer Price Index (CPI).

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