New Zealand Local Government Funding Agency

SECTOR	Agency
RATINGS	AAA domestic/AA+ foreign (S&P) AA+ domestic/AA+ foreign (Fitch)
RATING OUTLOOK	All stable
FUNDING VOLUME 2023/24	NZ$6.5BN/NZ$5.4BN
RISK WEIGHT, LCR LEVEL	20% (RBNZ)
REPO ELIGIBILITY	RBNZ

About New Zealand Local Government Funding Agency

New Zealand Local Government Funding Agency (LGFA) was enabled under the Local Government Borrowing Act 2011. The agency is owned by 30 local authority councils and the New Zealand government. LGFA’s primary purpose is to provide more efficient funding and diversified funding sources for New Zealand local authorities. LGFA has 77 council and five council-controlled organisation members, which combined are responsible for all the sector’s debt.

LGFA’s obligations are guaranteed by 72 councils. The security backing the guarantee obligations is the property taxes of the guarantor councils. LGFA has the same credit ratings as the New Zealand government and is the largest issuer of NZD bonds after the New Zealand government.

Sustainable funding strategy

In 2023 LGFA established a sustainable financing framework and commenced issuing NZD Sustainable Financing Bonds. The framework is informed by market standards and follows their proceeds-based pillars. The framework is supplemented by LGFA’s two criteria documents for each type of sustainable loan.

Proceeds from the issuance of sustainable financing bonds are notionally allocated to a sustainable loan asset pool of green, social and sustainability (GSS) loans and climate action loans (CALs) to councils and council-controlled organisations. CALs are similar to a sustainability-linked loans and GSS loans, and CALs are provided to councils at a discounted loan margin to standard loans. An independent sustainability committee reviews council applications for GSS loans and CALs, and makes recommendations to LGFA for their approval for inclusion in the pool of assets.

GSS BOND PROGRAMME NAMES	Sustainable Financing Bond Framework
SUSTAINABILITY OBJECTIVES OF GSS BOND PROGRAMME The Sustainable Financing Bond programme was established to recognise LGFA’s commitment to support council borrowers to fund sustainable assets and activities and incentivise emissions reductions and also to enable LGFA to issue bonds that are notionally allocated to the sustainable loans on LGFA’s balance sheet; and advance the market for sustainable finance by providing an innovative opportunity for investors to support council borrowers to achieve their sustainability aspirations.
REFERENCE TAXONOMIES FOR THE USE OF PROCEEDS	Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines (mapped by UN SDGs) as well as other evolving international principles, taxonomies, standards and market practice.
FRAMEWORK WITH WHICH THE GSS BOND PROGRAMME IS ALIGNED	The framework is informed by (but does not claim direct alignment with) ICMA’s GBPs, SBPs and SBGs and is also informed by APLMA’s GLPs, SLPs and SLLPs
EXTERNAL REVIEW PROVIDER	Sustainalytics
PUBLIC ISSUER ESG RATINGS/SCORES INSTITUTION LGFA expects to initiate a process of ESG ratings in the near future.

FOR FURTHER INFORMATION PLEASE CONTACT:

Mark Butcher
Chief Executive
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