For as long as most people can remember, UK municipal finance has been safe and boring. In the wild days of the 1980s, Hammersmith & Fulham council almost went bust speculating in derivatives, and was saved by a landmark House of Lords ruling. Since then, UK council borrowing has been tightly constrained by central government while derivative use has been banned.
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What a poor analysis, no depth no understanding of vega trading, no insight.
There is a story here around the quality and independence of the advise received but the real questions have been missed again.
2/10 for effort and understanding
[…] In my previous LOBO article, I worked with derivatives consultant Gary Kendall to come up with a market valuation of Kent’s LOBO £442 million portfolio, which currently stands at £735 million. At Redcar & Cleveland they use “Bloomberg’s proprietary model for Bermudan cancellable swaps” which in the most recent accounts results in a 60 per cent premium to face value. […]
[…] Kent’s audited accounts represent LOBO loan liabilities at just £200 million, whilst Nick Dunbar’s analysis shows a ‘mark to market’ actual loan value in excess of £700 million. As Nick Dunbar notes, the difference between the book and real LOBO loan values represents the entire amount of Kent Count…! […]
[…] Kent’s audited accounts represent LOBO loan liabilities at just £200 million, whilst Nick Dunbar’s analysis shows a ‘mark to market’ actual loan value in excess of £700 million. As Nick Dunbar notes, the difference between the book and real LOBO loan values represents the entire amount of Kent Count…! […]
[…] Kent’s audited accounts represent LOBO loan liabilities at just £200 million, whilst Nick Dunbar’s analysis shows a ‘mark to market’ actual loan value in excess of £700 million. As Nick Dunbar notes, the difference between the book and real LOBO loan values represents the entire amount of Kent Count…! […]
[…] Kent’s audited accounts represent LOBO loan liabilities at just £200 million, whilst Nick Dunbar’s analysis shows a ‘mark to market’ actual loan value in excess of £700 million. As Nick Dunbar notes, the difference between the book and real LOBO loan values represents the entire amount of Kent Count…! […]
[…] At Kent County Council, the difference between what Kent say their LOBO loans cost and the actual repayment cost is more than the councils annual social welfare budget. […]
[…] At Kent County Council, the difference between what Kent say their LOBO loans cost and the actual repayment cost is more than the councils annual social welfare budget. […]