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Loans that meet customers’ needs

In 2020, Kommuninvest’s lending grew to SEK 442.8 (406.5) billion. This growth reflects increased investment and funding needs among Sweden’s municipalities and regions. The increase also demonstrates Kommuninvest’s increased competitiveness. At the end of 2020, Kommuninvest had a total of 912 (964) active borrowers.

Strengthened market position
Through Kommuninvest and other capital market players, Sweden’s municipalities and regions were able to efficiently meet their funding needs in 2020. Kommuninvest offers loan products for which capital is tied up for short or long periods, at fixed or variable interest rates, as well loans of complete or partial termination.

As a consequence of the corona pandemic, the pace of lending per week in March and April was more than twice as high as during an average week in 2019. Uncertain conditions in the bond and commercial papers market at the beginning of the crisis caused municipalities with their proprietary funding programmes to turn to Kommuninvest for their financing to a greater extent than they otherwise would. Initially, there was also a need for a slightly increased liquidity in some municipalities. When the uncertainty in the bond and commercial papers market had subsided and the central government support packages appeared, Kommuninvest’s lending returned to more normal levels. Due to the central government support packages, liquidity remained favourable among municipalities and regions, resulting in relatively low lending growth in the autumn.

At the end of the year, lending amounted to SEK 442.8 (406.5) billion in nominal terms, an increase of 9 (15) percent. Kommuninvest’s competitiveness, expressed as the percentage of accepted bids, has remained strong. The acceptance rate for submitted bids was 98 (99) percent.

Of the agreed lending for the year, that is, new loans and renegotiations of existing loans, 89 (88) percent were loans with capital tied up for more than one year and 11 (12) percent with capital tied up for one year or less. Loans with capital tied up for one to three years accounted for 26 (20) percent of volumes.

At the end of 2020, Kommuninvest’s lending portfolio consisted of 49 (47) percent loans with fixed interest and 51 (53) percent loans with variable interest rates.

Increased volumes of Green Loans
The volume of Green Loans granted, financing for municipal investment projects promoting the transition to low carbon emissions and sustainable growth, increased over the year.

At the end of 2020, SEK 74.7 (63.1) billion in Green Loans had been granted to 431 (346) projects and to 167 (150) municipalities and regions. More information about Green Loans can be found on pages 18–19.

Loans provided only to Swedish municipalities and regions
All of Kommuninvest’s lending is to Swedish municipalities and regions. Loans may be offered to:

• Municipalities and regions who are members of the Kommuninvest Cooperative Society.
• Municipal and regionally-owned companies, in which one or more members of the Kommuninvest Cooperative Society holds a controlling influence.
• Local government foundations and associations, on the condition that a guarantee is provided and that they are closely affiliated with a member or members of the Kommuninvest Cooperative Society.

Welfare Economists: Accurate expert advice in tough times

In June, to strengthen the analysis of how the corona pandemic is impacting the municipalities and regions, Kommuninvest initiated the independent expert group “Welfare Economists”. The pandemic has brought a tougher economic situation for the local government sector. The group is tasked with identifying, investigating and presenting recommendations regarding key issues that arise. The group includes some of the foremost experts on local government sector finance in Sweden. In the autumn of 2020, the group published two reports for the government and to the local government sector, containing eight recommendations in total. The process will be continued in the spring of 2021. These reports have broadened Kommuninvest’s knowledge base and have been well received among municipalities and regions.

The recommendations in the second report, published in November, were directly addressed to the municipalities and regions: “The local government sector’s path out of Covid–19 – three sound pieces of advice”. Despite the stresses of the pandemic, a certain scope for economic manoeuvre has been created.

This should be made use of, primarily to build long-term economic sustainability, mainly by means of efficiencies.

It is a matter of keeping funds under control. The scope that has arisen should not be used to incur unsustainable cost increases. It is a matter of creating new approaches. Aided by more rigorous and consistent investments in digitalisation, coordination and reduced administration, it is possible to raise quality while rationalising resource utilisation and improving the working environment.
It is also a matter of thinking long term. Many municipalities and regions can improve their long-term financial management: by, among other things, developing their group structure, applying performance targets adapted to their specific conditions, and by more actively analysing their liquidity and cash flows. On the whole, the Welfare Economists state that the local government sector has a unique opportunity to start building economies that will be sustainable in the long term. This opportunity must be taken.

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