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London’s Northern Line extension picks up speed through capital markets funding

13 May 2015

Allen & Overy said today that the GBP200 million Consumer Price Index (CPI) linked bond issue by Community Finance Company 1 plc on behalf of the Greater London Authority, which will be used to part-fund the extension of London Underground’s Northern Line to Battersea, highlights the growing interest from local government bodies in raising finance through the capital markets.

The listed bonds due 2040, which were arranged by Lloyds Bank Commercial Banking, form part of a wider GBP1 billion infrastructure project. This transaction is essential to the regeneration of Vauxhall, Nine Elms and Battersea and is expected to lead to the creation of 24,000 jobs and 18,000 new homes.

Geoff Fuller, capital markets partner, commented: “London remains a hothouse for investment interest and the CPI-linked approach has enabled the GLA to raise the finance it requires for this project in the most cost effective manner. The deal’s structure takes advantage of the lower CPI rate environment, as opposed to the fixed rate borrowing available at the Public Works Loan Board ‘project rate’ or a Retail Prices Index rate, and we understand that it is expected to deliver value for Londoners by potentially saving up to GBP40m over the next 25 years. We expect to see more local authorities turning to the capital markets for their funding requirements.

The Allen & Overy team advised Lloyds Bank plc as dealer on the transaction and was led by partner Geoff Fuller with support from counsel Beth Collett and senior associate Alexis Hayworth. This transaction follows the Community Finance Company 1 plc’s inaugural GBP600m issuance in 2011 on behalf of the GLA to part fund the CrossRail project, a deal on which Allen & Overy also advised.

For further information, please contact Rebecca Hooper,, on +44 (0) 20 3088 2152.

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