This brochure describes what FNFA can do for your First Nation. To learn more about how the FNFA
works, how you can become a... [more]
This brochure describes what FNFA can do for your First Nation. To learn more about how the FNFA
works, how you can become a borrowing member.
Large governments, such as national and provincial governments, major cities, and
utilities, have the capacity to manage their own public borrowing. Smaller regional and local governments, however, do not have the large size necessary to achieve these same low rates on their own. Instead, these smaller borrowers finance their projects through higher rates at banks,or request funding from their provincial governments. To correct this unfairness, some provinces pool together all of the financial needs for all municipalities to form finance authorities, for example, the Municipal Finance Authority of British Columbia (MFA), after which the FNFA is modeled. This pooling approach enables the borrowing requirements of all municipalities, large and small, to achieve the volume necessary for the finance authority to access directly the bond market. Individual municipalities, under this pooling approach, do not themselves need to be experts on borrowing. Instead, the finance authority employs people with expertise in capital financing. Municipalities pooling their financial needs also increase the amount of borrowing, which attracts institutional investors, and increases their leverage to negotiate the best terms
and conditions. The size, stability, and diversifi cation of finance authorities allow them to directly access the financial markets, issuing their own bonds or debentures on behalf of their
members. Pooling First Nations will result in lower interest rates and transaction costs.
Borrowing members choose the term or repayment period that best suits their needs and have the option of locking in interest rates for the full repayment term. Predictable low costs, and the flexibility to set repayment terms to match budget capacity enables First Nations governments to plan better, and to stretch their resources for growth.