Securities issued by Swedish municipalities have quickly become a popular asset class in the Swedish fixed-income market. The local government debt office, Kommuninvest, recently passed the SEK 100 billion mark in its Swedish Benchmark Programme, and a further SEK 105 billion are outstanding in bonds issued by the municipalities themselves.
The municipal bond market borrowing trend has clearly established itself. The total outstanding volume has increased by about SEK 84 billion in three years, according to figures from Kommuninvest.
”Reduced bank lending and Kommuninvest’s own ambition to build a strong presence in the Swedish bond market are the main reasons,” says Mattias Bokenblom, Head of Research at Kommuninvest.
Kommuninvest’s Swedish Benchmark Programme was launched in 2010 with the goal of becoming the issuer’s largest funding programme. But it has also helped make municipal bonds a relevant new asset class in the Swedish fixed income market, in addition to Swedish government bonds and covered bonds, according to Kommuninvest’s Head of Funding and Treasury, Anders Gånge:
”We have now achieved the goal we established upon launch in 2010: to surpass 100 billion kronor by the end of 2015, to have half of our long-term borrowing in Swedish kronor and a complete bond curve with maturities ranging from one to five years. This feels very satisfying.”
Kommuninvest targets SEK 110-140 billion in outstandings by the end of 2015. As of 3 February the outstanding volume in the Programme was SEK 101.1 billion distributed among the following maturities (SEK billion):
• K1508, maturing August 2015: 11.1
• K1610, maturing October 2016: 22.6
• K1708, maturing August 2017: 25.5
• K1806, maturing June 2017: 7.7
• K1903, maturing March 2019: 21.4
• K2012, maturing December 2020: 12.8
In 2015 Kommuninvest plans to borrow SEK 90-105 billion in long-term bonds on the Swedish and international bond markets.
Kommuninvest is the Swedish municipalities’ and county councils’ own lending institution. Kommuninvest is owned by 280 Swedish municipalities and county councils in order to support their financial administration through stable and cost-effective financing, professional development and collaboration. With about SEK 220 billion in loans, Kommuninvest is the largest lender to Swedish municipalities and county councils.
For further information
Anders Gånge, Head of Funding & Treasury
Tel: +46 (0) 10-470 87 12
Pelle Ekestubbe, Senior Portfolio Manager/Treasury
Tel: +46 (0) 10-470 88 62
Björn Bergstrand, Head of Media Relations
Tel: 010-470 87 31 alt. 070-886 94 76