How Kommuninvest helps build welfare

Kommuninvest finances more than half of the Swedish local government sector’s investments in new housing, schools, homes for the elderly, swimming baths and other infrastructure investments.

Through our lending, we provide conditions for Swedish municipalities and regions to invest cost-efficiently in welfare. Since the financial crisis ten years ago, Kommuninvest’s share of the local government sector’s funding has risen sharply and today we account for slightly more than half of the total loan debt. The explanation is partly that municipalities and regions have increasingly joined Kommuninvest as members, and partly that the new, stricter regulations have made it increasingly difficult for banks and other financial institutions to compete with our favourable credit terms.

1. Funding
Kommuninvest continuously raises funds both in Sweden and in the international capital market. The local government sector’s inherent stability combined with our members’ joint and several guarantee undertaking means that Kommuninvest’s funding is regarded as highly secure. From a credit risk perspective, Kommuninvest’s funding is regarded as equivalent to the Swedish central government’s own funding. The low risk, combined with Kommuninvest’s history and good reputation in the capital market, affords us access to financiers who generally lend to us on favourable terms. To be able to meet our members’ credit requirements, even when the markets are uneasy, we always maintain surplus liquidity in reserve.

2. Loan application and credit check
When one of Kommuninvest’s customers decides to borrow money for one or more investments, the municipality or the region contacts Kommuninvest to apply for a loan. Normally, our lending is not tied to any specific purpose and, in accordance with the Swedish principle of local self-government, borrowers need not account for how the money will be used.

Since we have usually known our members well for many years, we generally have a good knowledge of their financial situation. Kommuninvest performs regular checks to determine customers’ credit capacity and, in connection with each lending decision a check is made to ascertain whether the loan to be granted is in line with the customer’s credit capacity. Together we find a solution that both meets the needs of the borrower and takes into account the combined loan debt of the Society’s members.

3. Green Loans
If the investment for which a municipality or region is borrowing money is compatible with Sweden’s environmental objectives or those of the region and contributes to a more resource-efficient and climate-resistant society, the borrower has the opportunity to apply for a Green Loan. For the Environmental Committee to grant a Green Loan, the investment must meet a number of predetermined sustainability criteria and be included in one of eight categories, including investments in renewable energy, climate-smart buildings, sustainable transport and energy efficiency. Kommuninvest finances its green lending by issuing Green Bonds, which are sought after by investors and meet a number of requirements to be recognised as green. Read more about Kommuninvest’s Green loans on page 18.

4. Disbursement of loans
Because we know our members well and apply a fast and efficient credit process, the time from the first call regarding the borrowing requirement until the loan can be disbursed is brief. If a Green Loan is involved, we take care of the additional administration and documentation that green financing requires, such as the external review and reporting to investors having purchased Kommuninvest’s Green Bonds.

5–6. Advice and debt management through KI Finans
Throughout the term of the loan, the borrower is in continuous contact with our Client Relationship manager and has access to all of Kommuninvest’s combined expertise. In the web-based financial management service KI Finans, customers’ finance officers have access to transaction management, analysis and reporting of liabilities and assets.


About Kommuninvest

Kommuninvest is a municipal cooperation for efficient and sustainable financing of housing, infrastructure, schools, hospitals etc. Together, we get better loan terms than each one individually. Since its inception in 1986, the Kommuninvest collaboration has helped lower the local government sector’s borrowing costs by many billion kronor. Currently, 292 municipalities and regions are members of this voluntary cooperation. With total assets in excess of SEK 525 billion, Kommuninvest is the largest lender to the local government sector and the sixth largest credit institution in Sweden. The head office is located in Örebro.

Download the Annual Review 2020