A Local Government Funding Agency (LGFA) or Bond Bank is financial institution that serves as a vehicle for local government authorities such as municipalities, county councils and regions to access capital markets for the purpose of jointly procuring credit for public investment projects. The local and/or regional authorities of a country or state typically own the LGFA, sometimes with a minor ownership by the state.[1]
It works as a co-operative agency where the participating authorities come together in order to ensure lower interests rates on loans, based on the creditworthiness of the participating members. This co-operation can also help the local authorities to achieve a higher credit rating than if they act independently. The agency normally does not seek to make profits and any surplus is usually reinvested in the activities. LGFAs exist and operate within the borders of the respective countries where they are found.