The quarterly report ”Local Government Debt Management”, which offers a picture of the structure and conditions of the total debt of the municipal sector in Sweden, has now been updated with new data for the third quarter 2022.
The report is based on Kommuninvest’s lending and transactions registered by municipalities and regions, as well as their companies, in the debt management tool KI Finans. For the second quarter, the data set consists of 8 313 loans, certificates and bonds with a total value of SEK 600 billion as well as 1 637 derivatives linked to underlying loans totaling SEK 195 billion.
New transactions in the second quarter 2022
Interest rates for new transactions continued to rise at a rapid pace. The average interest rate, including derivatives, increased from 1.23 percent in the second quarter 2022 to 2.09 percent in the third quarter.
The average maturity of new transactions was shortened from 2.87 years for the second quarter to 2.19 years for the third quarter. The average period of fixed interest, including derivatives, was extended: from 2,08 years to 2.32 years.
Total debt
For the total debt, there was a significant rise in interest rates. The average interest rate, including derivatives, increased from 1.00 percent in the second quarter 2022 to 1.28 percent in the third quarter. The average interest rate excluding derivatives increased from 0.81 percent to 1.35 percent.
The average maturity of the total debt was shortened from 2.76 years for the second quarter 2022 to 2.64 years for the third quarter. The average period of fixed interest, including derivatives, was also shortened: from 2.77 years to 2.71 years. By using derivatives, the period of fixed interest was extended from 1.56 years to 2.71 years.
– Movements continue to be large. From the third quarter 2021 to the third quarter 2022, the average interest rate, including derivatives, on new transactions increased from 0.25 percent to 2.09 percent. This is now starting to have substantial effects for the total debt and thereby on the overall interest costs that municipalities and regions have to manage, says Erik Törnblom, acting Head of Research at Kommuninvest.
From the third quarter 2022, the report is based on an expanded sample of loans and derivatives. The time series have been adjusted on the basis of the new sample size.
Local Government Debt Management Q3 2022
For further information
Erik Törnblom
Acting Head of Research
Tel: +46 10 470 87 41
E-mail: erik.tornblom@kommuninvest.se
David Ljung
Head of Communications
Tel: +46 73 068 45 45
E-mail: david.ljung@kommuninvest.se
