New Zealand Local Government Funding Agency Limited Analysis

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 half year results, released 26 February 2026

Financial and Operational Performance

Directors are pleased to announce a strong financial performance for the six-month period with:

Total interest expense for the six-month period was $503.8 million, a 25% reduction over the comparable 2024-25 period result. Interest expense was lower due to lower interest rates compared to the prior comparable period.

Total interest income for the six-month period was NZ$528.2 million, a 23% reduction over the prior comparable period. Interest income was lower than the comparable period because interest rates were lower e.g. the 3 month BKBM rate averaged 2.80% for the six-month period to 31 December 2025 compared to 4.88% for the sixmonth period to 31 December 2024.

Total operating income of NZ$25.8 million was $1 million above the SOI forecast of NZ$24.8 million primarily due to our offshore cost of borrowing being more cost effective (after hedging costs) than borrowing in the domestic debt capital markets. It was a 57% increase over the prior comparable period.

LGFA shareholders equity has risen to NZ$138.114 million, up from NZ$121.785 million on 30 June 2025. With the addition of the Borrower Notes the total capital base of LGFA is now NZ$877 million supporting total assets of NZ$28.6 billion.

Net operating profit rose to NZ$16.36 million, up 90% from the prior comparable period.