Debt restructuring
About this course
When and how to restructure council debt — premature repayment + redraw, LOBO breaking, swap-based restructuring. Decision framework, NPV evaluation, IFRS 9 / 10% test accounting, governance and audit.
What you'll learn
- What restructuring is
- When to restructure
- NPV evaluation
- PWLB repay + redraw
- LOBO replacement
- Accounting & IFRS 9
- Governance & audit
Part of these pathways
Related courses
- PWLB explained
- PWLB repayment structures
- PWLB break costs — mechanics & live calculator
- Strategic PWLB borrowing
- Reading the PWLBpredict
- Reading PWLB activity
Common questions
What is Average life?
The principal-weighted average time to repayment of a loan. For a maturity loan, average life = years to maturity. For an EIP loan, average life = years/2 + 0.25. PWLB rates are set on average life, not calendar maturity — so an EIP loan attracts a lower rate than a maturity loan of the same calendar length.
What is Break cost?
The total cost to terminate an existing loan early. For PWLB it's the premium owed under the DMO methodology. For market loans, the break cost is set by the loan documentation — typically PV of remaining flows at a reference rate.
What is Carrying amount?
The book value of a loan on the balance sheet at amortised cost — initial recognition value adjusted for principal repayments, interest accruals, and amortisation. The reference point for the 10% test.
What is Code of Practice on LA Accounting?
The CIPFA / LASAAC Code of Practice on Local Authority Accounting in the United Kingdom. The LA accounting framework. Adopts IFRS-based standards (including IFRS 9) for treasury operations, with statutory overrides specific to LA debt.
What is Discount?
A reduction in the principal owed when prematurely repaying a loan whose rate is ABOVE the current PWLB premature repayment rate. The borrower benefits from refinancing at lower rates but the discount captures most of the rate-saving — leaving only a small NPV gain.
What is Discount rate?
The rate used to convert future cash flows to present value in NPV calculations. For LA debt restructuring, typically the equivalent-tenor PWLB rate today — i.e. comparing existing flows to what new borrowing would cost.