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The local government sector


  • The average annual increase of the local governments debt 2010-2021 was 6.7 percent.
  • The growth rate in 2021 was 3.9 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 2022, Kommuninvest’s market share is estimated to 59 percent, the market programmes to 29 percent and the banks to 12 percent.

Local government sector funding

Maturity profile

  • The average maturity was 2.59 years
  • 26 percent of the debt matures within 12 months
  • 11 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.

26 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

Financial derivatives

  • 50 percent of the borrowing is linked to a variable market rate, primarily 3M Stibor
  • The use of derivatives extended the fixed-interest period from 1.54 to 2.71 years

Trend & analysis

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

Fixed-interest period excluding and including derivatives

Interest rate level

  • Average interest rate excluding derivatives was 2.37 percent
  • Average interest rate including derivatives was 1.89 percent

Trend & analysis

The funding cost for the municipal sector is low in a long-term perspective but increases quite rapidly. The average interest rate increased by 31 basis points in comparison with the previous quarter to 1.89 percent.

Interest excluding and including derivatives