https://loboloans.info/

Wirral

Data last updated: 14/09/2021

What is the current situation?

Wirral Council has 18 LOBO loans totalling £131 million, including loans that have had their option removed by the bank.

Wirral Council is 17th out of 210 in the ranking of councils with the most LOBO debt.

Since we began monitoring in 2015, this is what happened.

How big is the problem?

Wirral is currently paying £8.12 million in interest per year.

For a sense of scale, this corresponds to 4.68% of what the Council collected in council tax for the year 2020/21.

It is projected to spend at least £273.2 million in interest payments over the remaining term of the loans, the last one ending in 23/01/2078.

The interest rates for Wirral Council’s LOBO loans are between 4.640% and 8.000%. Currently, councils can borrow from central government (via the Public Works Loans Board) at much lower rates (between 1% and 2.5%) and on much more favourable terms. To illustrate, on a loan of £10m over a 50 year term, at 4% a council will pay £20m in interest while at 2% they will pay £10m.

Banks can sell their loans to other lenders. The selling price of a loan varies constantly based on the embedded derivatives and on the likelihood of the loan and interest being paid in full. We’ve rated the loans based on their most recent market valuation, also called fair value. A loan with a high rating will be considered valuable by the lenders and therefore might have a higher exit penalty compared to a loan with a lower rating.  However, if the Council were able to negotiate a good exit deal, it could potentially save more on a high-rated loan than on a lower-rated one.