The Local Government Association (LGA) has appointed a top city finance expert to complete the business case for the establishment of a municipal bonds agency.

Aidan Brady, a former senior executive at Deutsche Bank with more than 20 years experience in the City, has been appointed lead adviser to the project.

Council chiefs hope the agency could give local government access to borrowing rates lower than those on offer through the Treasury controlled Public Works Loan Board (PWLB).

The PWLB currently offers money to councils at a 1% premium rate to Treasury gilts, with discounts available subject to conditions.

Financial modelling undertaken by the LGA indicates a council borrowing £100m over 20 years could save as much as £4.7m compared with a PWLB loan.

To finalise the business case, Mr Brady will be responsible for setting out an operating model for the collective bonds agency as well as arrangements for governance and capital structure, pricing and ratings and potential demand for bonds.

Internationally-renowned local government finance expert, Lars Anderson, who founded the Kommuninvest Agency for collective municipal bonds in his native Sweden, and Professor Francis Breedon, professor of economics and finance at Queen Mary University of London have been appointed as strategic advisors to the project.

Major authorities such as Birmingham City Council, Cambridgeshire CC, Newcastle City Council and seven London boroughs – including the City of London Corporation, Westminster City Council and Kensington and Chelsea RLBC – have committed to work with the LGA to develop the bonds agency at an initial estimated launch cost of £2.7m.

Chair of the LGA, Sir Merrick Cockell, said: ‘Our plans to develop an agency have been endorsed by every type of local authority from places right across the UK.

‘This appointment is an important step in our efforts to bring down the cost of borrowing so that councils can deliver even  better value for local taxpayers.'