Press Release

TfL issues new bond

16 March 2005

Transport for London on Thursday launched a new £200 million bond as part of the financing for TfL’s £10 billion, 5-year Investment Programme.

The bond was significantly oversubscribed, thereby enabling an even more competitive rate of interest than TfL’s first bond, which was launched in December 2004.

The interest rate on the new £200 million, 25 year bond was 4.5 percent. This compares favourably with the interest rate on the previous bond of 5.00 percent.

The December 2004 bond was already priced very competitively, putting TfL’s bond very close – at a premium of just 0.50 percentage points – to central government borrowing. But the market has trimmed this even further to just 0.38 percentage points over government borrowing.

Jay Walder, TfL’s Managing Director of Finance and Planning, said:

"This shows the market's confidence and increasing familiarity with Transport for London. It also shows the markets have confidence in our ability to manage and deliver day-to-day services and the 5-year Investment Programme.

“We are very pleased with the demand for this bond. TfL undertook an extensive series of meetings with major investors, both British-based and international, ahead of the launch to ensure the maximum interest.

“These funds will be used to deliver major projects to improve travelling for Londoners and help keep the capital at the forefront of major world cities.

”This marks a further, significant step in the expansion of our financial stakeholders, based on the growing perception of TfL as a high quality public sector borrower. This is reinforced by our AA ratings and a 20% risk weighting from the FSA.”

Lead managers were Morgan Stanley and the Royal Bank of Scotland.