Carterton District Council [CDC] unanimously passed a resolution to enter into an arrangement with a major bank to manage interest rate risk at the council meeting yesterday.
CDC discussed the possible arrangement with BNZ after last year’s review of its treasury management policy last year.
The review was assisted by PriceWaterhouse Coopers [PwC].
A report before this week’s CDC meeting in Carterton asked the council to approve entering the international swap dealer’s association [ISDA] arrangement with BNZ.
Interest rate swaps are contracts in which a stream of future interest payments is exchanged for another based on a specified principal amount. A swap deal would turn the interest on a variable rate loan into a fixed cost, which would help CDC manage interest rate risk.
To facilitate such swaps, an ISDA must be entered into. CDC had worked with PwC and legal advisers Simpson Grierson to facilitate the contract with BNZ.
Following the CDC approval of the deal this week, the council’s chief executive will be authorised to sign the relevant documents for the ISDA arrangement.
“We will then be able to enter into swap arrangements to help manage interest rate risk when appropriate, as guided by PwC,” the report said.
– NZLDR
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Carterton District Council appears to be well managed and more on top of things than the SWDC. Good job 👍.