The local government sector


  • The average annual increase of the local governments debt 2010-2019 was 7 percent.
  • The growth rate in 2020 is estimated at 6 percent.
  • Borrowing through Kommuninvest and the municipalities’ own market programmes are the two dominant funding options for Sweden’s municipalities and regions.

Trend & analysis

Market shares have recently been rather stable. At the end of June 2021, Kommuninvest’s market share was estimated at 57 percent, the market programmes had 29 percent and the banks had 14 percent.

Local government sector funding

Kommuninvest Market programmes Banks
Local government sector funding 57 29 14

Maturity profile

  • The average maturity was 2.82 years
  • 27 percent of the debt matures within 12 months
  • 14 percent of the debt has a remaining term longer than 5 years

Trend & analysis

Swedish local governments have a relatively short average maturity. This means that investments are funded with borrowing that needs to be renewed several times during the economic life of the investments.

27 percent of the loan portfolio matures within one year, of which 20 percent is made up by short term funding, such as commercial papers, which are extended three to four times per year.

Maturity profile

0-1 years 1-2 years 2-3 years 3-4 years 4-5 years 5-7 years 7-10 years >10 years
Maturity 17 18 15 17 9 10 3 1

Financial derivatives

  • 49 percent of the borrowing is linked to a variable interest base, primarily 3M Stibor
  • Through the use of derivatives, the fixed-interest period is extended from 1.61 to 2.84 years

Trend & analysis

Many municipalities, regions and municipal companies fund their investments with loans that have short maturity. Some municipal actors then use interest rate swaps to extend the fixed-interest period.  This means that the period of fixed interest exceeds the maturity on the funding.

Fixed-interest period excluding and including derivatives

0-1 years 1-2 years 2-3 years 3-4 years 4-5 years 5-7 years 7-10 years >10 years
Fixed-interest period excluding derivatives 63 8 6 9 5 7 2 1
Fixed-interest period including derivatives 37 12 11 13 8 11 6 2

Interest rate level

  • Average interest rate excluding derivatives was 0.51 percent
  • Average interest rate including derivatives was 0.93 percent

Trend & analysis

The funding cost for the municipal sector is low in a long-term perspective. The average interest rate decreased by 1 basis point in comparison with the previous quarter to 0,93 percent.

Interest excluding and including derivatives

Interest excluding derivatives Interest including derivatives
Interest rate level 0.51 0.93