Revolving Credit Facility: Drawdown

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A decision made on 27 July 2021

Decision Reference: MD-TR-2021-0083
Decision Summary Title:	Drawdown from the Revolving Credit Facility		Date of Decision Summary:	21st July 2021
Decision Summary Author:	Manager - Treasury and Investment Management		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Drawdown from the Revolving Credit Facility		Date of Written Report:	21st July 2021
Written Report Author:	Manager - Treasury and Investment Management		Written Report: Public or Exempt?	Exempt (Article 34 – Economic and Financial interests of the States)
Subject: Draw down from the Revolving Credit Facility.
Decision(s): The Minister approved a utilisation cap from the Revolving Credit Facility (‘RCF’) of £110 million in total, to allow the Government of Jersey to meet their cashflow and liquidity requirements as they fall due. £25 million has already been drawn from the RCF to the 30 June 2021. A further £85m may therefore be drawn from the RCF under the approved cap. Drawings may be completed up until 30 September 2021, at which date a review of the level of the cap must be conducted and approved by the Minister before further drawings can be made. The Treasurer of the States is authorised to complete monthly utilisation requests for July, August and September 2021 as required to make additional drawings of up to £85 million.
Reason(s) for Decision: In signing, MD-TR-2020-0051, dated 7th May 2020, the Minister agreed to enter a £500 million RCF on behalf of the States of Jersey to provide short-term liquidity. Agreement to withdraw funds from the RCF was approved in the States Assembly 130/2020 (Government Plan 2021-24) which approved a maximum borrowing limit of £385.953 million (inclusive of the approval for a Fiscal Stimulus Fund). By utilising the RCF, the Minister ensures that liabilities can be met as they are forecast to fall due until the end of September. It allows sufficient time to plan and implement a medium-term debt strategy as outlined in Government Plan 2021-24. For the avoidance of doubt the £85m is the permissible additional value which may be drawn down over the current quarter to 30 September 2021. In addition to the £25m drawn to date, the authorisation to draw up to £85m over the course of this quarter, approved in this MD, will take the total drawn value of the RCF to £110m.
Resource Implications: The decision to set a drawn down cap incurs no costs but any utilisation of the RCF will incur interest costs at the Risk Free Rate plus the approved margin. The estimated financing costs of the RCF are included within the Government Plan 2021-24. Once a utilisation is made the Consolidated Fund cash balance will increase by the amount of the request, the investment return on this amount is deemed to be negligible over the short period of time. The completion of the utilisation request to the agent bank and the management of the transfers form part of the day-to-day activities of the Treasury and Exchequer.
Action required: The Head of Financial Governance to notify the Director of Treasury and Investment Management when the decision has been signed.
Signature:		Position: Deputy S J Pinel, Minister for Treasury and Resources
Date Signed:		Date of Decision: