Strong sector surpluses
Generous central government allocations reduce needs for loan financing. In 2020, Swedish local government borrowing grew by SEK 40 billion to SEK 766 (726)¹ billion. Kommuninvest continues to strengthen its position, with the Company financing 58 (56) percent of the local government sector’s total debt.
The combination of extensive renovation needs for homes and properties built in 1965–1975 and strong population growth, requiring additional operational premises and expanded infrastructure, is driving up the local government sector’s investments. These investments encompass several areas of local government responsibility, including property, housing, water and sewerage, infrastructure and energy production.
In 2017 and 2018, the self-financing ratio for investments decreased, while it stabilised in 2019 and it is now expected to increase in 2020 due to the strong surpluses that were primarily a result of the general allocations from the central government announced during the year. Additionally, the effects of slightly lower growth in the tax base will not be felt until two years later, in this case in 2022, when repayments are due. This entailed decreased funding requirements in 2020, despite investment needs remaining high.
Kommuninvest grew strongly in the years following the financial crisis and has increased its market share further in recent years, from 44 percent in 2013 to 58 percent in 2020. Financing via the banking sector and bilateral parties has fallen to 13 (14) percent. As recently as in 2013, the banks accounted for a third of the lending to Sweden’s municipalities and regions.
At that time, Kommuninvest was the largest individual lender with a market share of slightly more than 43 percent. About 20 municipalities and about ten municipal companies are currently active in the capital market. In 2020, issues of local government bonds and commercial papers accounted for 29 (30) percent of the sector’s funding.
During the period 2013–2020, the sector’s loan debt grew by an average 7 percent while, during the same period, Kommuninvest grew by an average 11 percent.
1) Forecast based on Kommuninvest’s ongoing monitoring of debt and investment trends in the Swedish local government sector. At the time of publication of this Annual Report, neither the complete data for 2020, nor the municipalities’ and regions’ own annual reports were available. Values and shares for 2019 have been adjusted in accordance with the municipalities’ and regions’ own Annual Reports.
Forms of local government funding
Swedish municipalities and regions have access to three main sources of loan financing:
• funding via Kommuninvest
• funding via the bank sector or other bilateral parties
• funding via the money and bond markets
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.