Treasury Management and Investment Strategy

Borrowing Strategy 2010/11 – 2012/13

25. The uncertainty over future interest rates increases the risks associated with treasury activity.  As a result the Council will take a cautious approach to its treasury strategy.

26. Long-term fixed interest rates are at risk of being higher over the medium term, and short term rates are expected to rise, although more modestly.  The Director of Finance and Corporate Services, under delegated powers, will take the most appropriate form of borrowing depending on the prevailing interest rates at the time, taking into account the risks shown in the forecast above.  It is likely that shorter term fixed rates may provide lower cost opportunities in the short/medium term. 

27. With the likelihood of long term rates increasing, debt restructuring is likely to focus on switching from longer term fixed rates to cheaper shorter term debt, although the Director of Finance and Corporate Services and treasury consultants will monitor prevailing rates for any opportunities during the year. 

28. The option of postponing borrowing and running down investment balances will also be considered.  This would reduce counterparty risk and hedge against the expected fall in investments returns.

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