Auckland Council

About Auckland Council

Auckland Council was established on 1 November 2010 under the Local Government (Auckland Council) Act 2009, through the amalgamation of eight councils in the Auckland region. The council is New Zealand’s largest local authority. It is responsible for the regulation, management and direction of the Auckland region and has a range of related mandatory and discretionary functions. Auckland is New Zealand’s leading economic region, generating more than a third of the nation’s GDP.

The council is responsible for issuing permits and consents for building activity within the Auckland region and the enforcement legislation concerning parking, licensing and the environment.

The authority and its subsidiaries provide and maintain infrastructure, such as transport networks, and essential public services such as water, sewerage, refuse collection and street lighting. The council also operates libraries and community facilities, and provides and maintains parks, reserves and sports fields.

Under the Local Government (Rating) Act 2002, Auckland Council has flexible powers to set, assess and collect rates to fund its activities. The council’s bond investors have security over rates revenue under a debenture trust deed.

Debt position

The Auckland Council group had NZ$10.2 billion of debt outstanding at the end of June 2020. It has issued debt in a range of maturities up to 30 years. The main funding sources are the domestic retail and wholesale markets, New Zealand Local Government Funding Agency (LGFA), and offshore markets through an EMTN programme and an Australian dollar debt-issuance programme. The council has issued debt in Swiss francs, Australian dollars, Norwegian krone and euros. Approximately 46% of the council’s debt has been issued in foreign currency.

SECTOR	SUBSOVEREIGN
CREDIT RATINGS (S&P) LONG-TERM NZD	AA/Aa2 (both stable)
CREDIT RATINGS (S&P) LONG-TERM FOREIGN CURRENCY	AA/Aa2 (both stable)
FOREIGN-CURRENCY PROGRAMMES	US$5BN SECURED MTN A$3BN MTN US$2BN SECURED ECP
FOREIGN-CURRENCY ISSUANCE SINCE JAN 2020	NONE
TERM FUNDING REQUIREMENT (NZ$BN)	FY21 FY20 FY19 1.7 2.1 0.5
RBA REPO ELIGIBLE	NO
RBNZ REPO ELIGIBLE	YES

Funding strategy

In its 10-year budget 2018-28, Auckland Council has plans for about NZ$26 billion in capital expenditure. It expects debt to grow to NZ$13 billion during this period. Domestic investors, including the LGFA, may not entirely meet these funding requirements. Therefore, the council has focused recently on developing a strategic presence in offshore markets. The new 10-year budget 2021-31 is due in July 2021.

The council seeks to spread its debt maturities and looks to offshore markets for the majority of its longer-dated funding requirements. It is agnostic as to the currency in which debt is issued, provided it meets acceptable New Zealand dollar pricing levels, as all debt is swapped back to New Zealand dollars.

Over the last few years, the council has developed its green-bond programme and has in excess of NZ$2 billion in eligible green assets. The council has issued NZ$850 million in green bonds to date. Its most recent issue, in September 2020, was a NZ$500 million transaction with 30-year tenor. The growth in Auckland Council’s eligible green-asset portfolio means it is now open to considering green-bond issuance in offshore markets.

Auckland Council expects to have annual funding requirements of NZ$800 million – NZ$1.8 billion up to 2028, including the refinancing of existing debt. The debt requirement for the year to the end of June 2021 is expected to be NZ$700-800 million.