Significant borrower with highest credit rating
Kommuninvest borrows money in capital markets in Sweden and internationally, which funds lending to municipalities and regions. Despite considerable global concerns regarding the trend in the corona pandemic, the Company’s strategic funding markets have functioned well with a favourable demand for Kommuninvest’s bonds. Kommuninvest was able to fulfil its funding plans at competitive rates. At the end of the year, total funding amounted to SEK 492.9 (446.8) billion in nominal terms.
New issue procedure and good demand for Kommuninvest bonds
The Company’s largest funding programme is its Swedish Benchmark Programme. During the spring of 2020, the issue procedure within the programme was developed with issues involving weekly auctions, rather than on request. The change has been received well by the capital market, with the year being characterised by favourable demand for the Company’s issues.
Our strategic funding markets are the SEK, USD and EUR markets, both in terms of traditional funding and what is termed as sustainable funding. The Company also addresses a tactical market in the form of Uridashi funding from
the Japanese market.
Focus on increased benchmark funding
Over the year, funding of SEK 131.4 (135.4) 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 9.5 (11.3) billion. Funding through short-term commercial papers, with maturities of less than one year, amounted to SEK 65.0 (35.5) billion. Previously issued funding of SEK 8.7 (19.7) billion was repurchased and SEK 129.4 (124.1) billions matured. 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.
During the year, five major funding programmes denominated in USD were implemented.
A total of SEK 68.7 (76.8) billion was issued in the Swedish Benchmark Programme with
SEK 259.3 (231.0) billion outstanding at the end of the year. In 2020, one bond with a new maturity was issued, with the Swedish Benchmark Programme comprising a total of eight outstanding bonds.
During 2020, two Green Bonds were issued, meaning the Company has issued 11 green transactions since 2016. Green Bonds make it possible to finance environmentally-oriented investment projects in the Society’s member municipalities and regions.
The Riksbank acquires Kommuninvest bonds
At the end of April, the Riksbank expanded its QE programme to also include local government bonds. Over the year, the Riksbank has acquired local government bonds on 31 different occasions for a total of SEK 45 billion, of which SEK 40.7 billion involved purchases of the Company’s outstanding 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)
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.