Clifford Chance (CC) and Allen & Overy (A&O) have taken lead roles as the Greater London Authority (GLA) becomes the first local authority to tap the bond markets since the mid-1990s, with a £600m issue to help fund London's Crossrail project.

The bonds will be issued through a special purpose vehicle set up by Lloyds Bank Corporate Markets, which is specially targeted at local authorities.

A&O has been advising Lloyds on the new vehicle since November last year, with City capital markets partner Geoff Fuller leading the team advising on the GLA bond issue.

The GLA instructed CC on the deal, with London managing partner David Bickerton and capital markets senior associate Clare Burgess leading the firm's team.

Mayor of London Boris Johnson announced the bond issue yesterday (3 July), with the GLA opting to turn to the financial markets rather than relying on the Government's Public Works Loan Board (PWLB) after the Government made borrowing through the PWLB more expensive last year.

The bonds are due to mature in 2034 and are priced at an interest rate equivalent to 5.017%, with the GLA stating the bond issue will work out around 0.17% cheaper than the alternative PWLB route. According to Johnson, the financial could shave £65m off the GLA's borrowing for Crossrail.

Overall the GLA will borrow £3.5bn to help finance Crossrail, which is expected to cost £14.8bn in total, with the Government and Transport for London financing the balance. The Crossrail project will link 37 stations running from Maidenhead and Heathrow in West London to Shenfield and Abbey Wood east of the capital.