New Zealand Local Government Funding Agency Limited

Overview

The New Zealand Local Government Funding Agency (LGFA) is a Council-Controlled Organisation (CCO) operating under the Local Government Act 2002. LGFA specialises in financing the New Zealand local government sector, operating with the primary objective of optimising the debt funding terms and conditions for participating local authorities.

Among other things, this includes:

• Providing debt to participating local authorities at the lowest possible interest rates,
• Making longer-term borrowings available to participating local authorities, and
• Increasing the certainty of access to debt markets for participating local authorities

Performance

The following information was extracted from New Zealand Local Government Funding Agency Limited's Full Year Results, released on 28 August 2026:

Operating income exceeded the Statement of Intent forecast primarily because our expanded offshore funding programme delivered lower all-in funding costs, after hedging, than comparable domestic issuance. This demonstrates the financial benefits of maintaining diversified funding sources and actively accessing international capital markets. Operating income increased by 54.8% compared with the previous year.

Operating expenses, excluding Approved Issuer Levy (AIL), were above budget, reflecting additional legal and implementation costs associated with onboarding water CCOs and introducing new lending products. AIL expense totalled NZD 7.073 million for the year and remains LGFA’s largest single operating cost.

Net operating profit of NZD 35.1 million was an increase of 84.8% over the previous year, reflecting the stronger growth in operating income despite higher operating expenses associated with strategic initiatives.

Shareholders’ equity increased during the year to NZD 147 million, strengthening LGFA’s financial position. Together with Borrower Notes, LGFA’s capital base at NZD 950 million continues to support a balance sheet of NZD 28 billion.

Maintaining a strong capital position is increasingly important as councils face higher debt levels and a more challenging financial environment. Strong capital and the guarantee structure underpin LGFA’s credit ratings, investor confidence and our ability to continue providing reliable, low-cost funding throughout changing market conditions. During the year LGFA’s AA+ credit ratings were reaffirmed by both Fitch Ratings (but placed on negative outlook) and S&P Global Ratings (stable outlook).