Significant borrower with highest credit rating
Kommuninvest borrows money in capital markets in Sweden and internationally, which funds lending to municipalities and regions. Demand for secure issuers remained good during the year and Kommuninvest was able to meet its funding plans on competitive terms. At the end of the year, total funding amounted to SEK 450.8 (397.4) billion.
Good demand for Kommuninvest bonds
During 2019, the Company experienced continued good demand for the securities it issues. In October, the Company decided to add the EUR market as a new strategic funding market. The announcement had a positive effect, leading to increased demand for the Company’s bonds. In October, the issue volume was doubled, which was largely attributable to the positive reception of the announcement regarding the EUR market.
In addition to the EUR market, our strategic funding markets are the SEK and USD markets, both in terms of traditional funding and what is termed as sustainable funding, that is, green bonds. The Company also addresses a tactical market in the form of Uridashi funding in the Japanese market. Kommuninvest strives to maintain an even distribution between domestic and international funding.
Focus on increased benchmark funding
Over the year, funding of SEK 135.4 (138.8) billion was raised in bonds with maturities of more than one year. In addition, funding with potential premature redemption within one year was agreed, corresponding to SEK 11.3 (14.7) billion. Funding through short-term commercial papers, with maturities of less than one year, amounted to SEK 35.5 (48.5) billion. Previously issued funding of SEK 19.7 (17.7) billion was repurchased. Funding is secured to replace loans that mature or are cancelled, to finance new loans in the lending operations and to adjust the size of the liquidity reserve according to the current market view and liquidity contingencies.
The Company conducts active funding activities, both internationally and in Sweden, through its major bond programmes, referred to as benchmark programmes. During the year, four major benchmark fundings denominated in USD were implemented.
A total of SEK 76.8 (64.9) billion was issued in the Swedish Benchmark Programme with SEK 231 (192.7) billion outstanding at the end of the year. In 2019, two bonds were issued (one of which was green), with the Swedish Benchmark Programme comprising a total of eight outstanding bonds.
During 2019, two green bonds were issued, meaning the Company has issued a total of seven bonds since 2016. Green bonds make it possible to finance environmentally-oriented investment projects in the Society’s member municipalities and regions.
New funding by currency
(excl. commercial paper funding)
|SEK 60 (46) %||60%|
|USD 32 (44) %||32%|
|JPY 8 (9) %||8%|
|MXN, TRY 0 (1) %||0%|
|ZAR 0 (0) %||0%|
|AUD 0 (-) %||0%|
New funding by programme
(excl. commercial paper funding)
|Swedish Benchmark Programme 52 (42) %||52%|
|Benchmark funding, other currencies 25 (43) %||25%|
|Uridashi 8 (11) %||8%|
|Green Bonds 14 (4) %||14%|
Positive news for Kommuninvest’s bonds during the year
In October, Kommuninvest decided to add the EUR market as a new strategic funding market. The announcement had a positive impact on the Company’s funding conditions in the Swedish market. Kommuninvest’s strategic funding markets are denominated in EUR, SEK and USD, both in terms of traditional funding and what is termed as sustainable funding, that is, green bonds.
In November, Kommuninvest issued nearly SEK 10 billion in a new three-year green bond within its benchmark funding programme denominated in USD. The transaction is the largest individual green bond to date from a Nordic SSA player (Sovereigns, Supranationals, Agencies), confirming Kommuninvest’s position as Sweden’s largest issuer of green bonds.
A significant SSA issuer
Kommuninvest issues securities on international funding markets in the category “Sovereigns, Supranationals and Agencies” (SSA). With large annual funding volumes, Kommuninvest is a major international player in the SSA segment. Borrowers with whom Kommuninvest compares itself include:
- Bank Nederlandse Gemeenten (Netherlands)
- European Investment Bank, EIB (Europe)
- KfW (Germany)
- Kommunalbanken (Norway)
- Kommunekredit (Denmark)
- Municipality Finance (Finland)
- Nordic Investment Bank, NIB (Nordic region and Baltic states)