Kommuninvest ﬁnances the development of Sweden’s local and regional sectors, as well as investments for a sound and sustainable society. The Company and its employees shall adhere to the legislation, regulations and rules applicable to the operations and shall always behave in an ethically correct manner, with transparency, integrity and honesty.
The Company applies zero tolerance to all kinds of corruption. No employee may provide or receive benefits that may be considered unfair and therefore criminal. The Company is required to identify and manage all potential and arisen conflicts of interest.
Local government debt office
Kommuninvest’s role in sustainability work primarily involves continuing to provide the Swedish local government sector with stable and efficient financing at the lowest possible cost. Accordingly, Kommuninvest fulfils a similar role for the local government sector as the National Debt Office does for the central government and its authorities.
Financing at lower cost means that tax funds stretch further. The fact that Kommuninvest has been able to continue offering financing during periods of financial unease, contributes to the security of the local government sector and the stability of the financial system. Accordingly, an indirect effect of Kommuninvest’s work is the strengthening of financial sustainability among the members, by ensuring the most effective possible financing, and by providing advice and support during the funding process.
Kommuninvest was established in 1986 to provide municipalities with access to an additional source of funding, as a complement to loans through the banking system. Our lending operations are limited to Swedish municipalities and county councils/regions, including their majority owned companies and foundations. The operations are to be characterised by the lowest possible risk exposure as possible and lack of vested interested in generating profit. To ensure high creditworthiness and low borrowing costs, the members of Kommuninvest Cooperative Society have entered into a joint-and-several guarantee undertaking for the Company’s commitments.
Partnership on behalf of members
One of Kommuninvest’s main objectives is to reduce local government borrowing costs. Large volumes and a relatively small organisation mean that administrative expenses can be kept at a low level. In 2017, they amounted to 6.1 (5.5) basis points in relation to total assets.
The profits generated in the operations are returned to the members in the form of interest on capital contributions and refunds in relation to business volume. In this way, SEK 445.4 (500.7) million was transferred back to the members of the Society in 2017.
Anti-corruption and business ethics
Kommuninvest strives for its transactions and relationships to be pervaded by good business ethics, as evident in both the Company’s Code of Conduct and its Sustainability Policy.
The Company’s employees shall adhere to the legislation, regulations and rules applicable to the operations and shall always behave in an ethically correct manner, with transparency, integrity and honesty. Zero tolerance of all forms of corruption applies.
Risk assessment of the business model and business relationship is done to ensure that work focuses on low-risk countries. Suspicions of serious irregularities that could entail or lead to a breach of law are to be reported. Such violations can also be reported anonymously via a whistleblower function handled by an external party. No matters related to anti-corruption or guidelines on money laundering have been investigated during the year.
Lowest borrowing costs
The graph on the next page compares local government funding costs in the Swedish fixed-income market, in relation to a reference rate and to remaining time to maturity. The green line demonstrates that Kommuninvest is the local government player that borrows at the lowest cost, approximately 20-40 basis points lower than other players, depending on maturity.
In-depth knowledge of conditions in the sector
Through in-house research and reports, Kommuninvest seeks to increase knowledge of the local government sector’s long-term financial conditions. Kommuninvest has, among other things, an in-depth partnership with the University of Örebro, promoting, for example, research on the local government sector’s debt management and financial conditions. Each year, we publish reports describing developments in local government investment and its funding, and we specifically study trends and phenomena associated with local government borrowing, debt and investment. In 2017, an open database was launched, enabling comparison between all of Sweden’s local government authorities with regard to trends in investment, borrowing debt and population.