Financial assurances for councillors

Tauranga City Councillors are assured the change of government hasn’t has any significant impact on financial markets. Photo: Supplied.

City councillors are seeking assurances today from treasurer Mohan de Mel that there has been no significant ripples in financial markets, following Thursday night's announced change of government.

Mayor Greg Brownless asked Mohan at Tuesday's Audit Finance Risk and Marketing Committee meeting, if a reported increase in the proportion of fixed interest rates is that because there may be some indication in the air the interest rates are likely to rise.

Mohan says the forecast interest rate rise is based on wholesale market forecasting the OCR will rise November next year, the same as Australia.

'There has also been increases in the US ten year rate as well which also impacts our long term interest rates,” says Mohan.

'I'll be more direct,” says Councillor Max Mason, addressing Mohan at the same meeting.

'Has the change of government had any effect potentially on any of your forward positions?

'I do note debt tracking slightly higher than current the National Government has in place, is going to put a little bit of pressure on the long term interest rates - but nothing significant at this stage, too early to say if there's an impact.

'The New Zealand dollar has come off a little bit, it is potentially inflationary going forward. The long term interest rate is always reliant on the offshore market.”

Tauranga City Council's 'Overall” fixed interest rate cover as at 28 February 2017 was at 79 per cent based on target debt level of $432.0m as at 28 February 2019. This is a 12 months forward looking indicator of Council's fixed interest rate cover.

Based on the 30 September 2017 interest rate profile, debt with exposure to short-term interest rates (floating interest rates) remains around $70.0m over the next 12 months

In terms of maintaining flexibility for managing interest rate risk, the treasury department recommended a target of around 80 per cent for fixed rate debt from a 12 months forward perspective. Accordingly, it is planned to increase the fixed rate position by 30 June 2018.

The recommendation to council is approved by the committee.

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2 comments

Council allegences?

Posted on 24-10-2017 21:36 | By MISS ADVENTURE

Looks like the Councillors, leadership woes ex Wellington are now worrying the locals for some reason, perhaps the direction from above is going to change. panic is now settung in about what happens next? The markets will determine all, inteest rates will increase.


The horse has bolted

Posted on 25-10-2017 12:20 | By MISS ADVENTURE

Now for some reason Councillors are hitting the warm seats with a shudder/shaking now worried about interest rates? Sadly the die is already cast and set, the money is spent or committed to be spent. The time to think about the consequences has already past by without a thought at all. Why panic now?


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