Press release -
Interest rates for the municipal sector continue to rise
The quarterly report "Local Government Debt Management", which offers a picture of the structure and conditions of the total debt of the municipal sector in Sweden, has now been updated with new data for the third quarter 2022.
The report is based on Kommuninvest's lending and transactions registered by municipalities and regions, as well as their companies, in the debt management tool KI Finans. For the second quarter, the data set consists of 8 313 loans, certificates and bonds with a total value of SEK 600 billion as well as 1 637 derivatives linked to underlying loans totaling SEK 195 billion.
New transactions in the second quarter 2022
Interest rates for new transactions continued to rise at a rapid pace. The average interest rate, including derivatives, increased from 1.23 percent in the second quarter 2022 to 2.09 percent in the third quarter.
The average maturity of new transactions was shortened from 2.87 years for the second quarter to 2.19 years for the third quarter. The average period of fixed interest, including derivatives, was extended: from 2,08 years to 2.32 years.
Total debt
For the total debt, there was a significant rise in interest rates. The average interest rate, including derivatives, increased from 1.00 percent in the second quarter 2022 to 1.28 percent in the third quarter. The average interest rate excluding derivatives increased from 0.81 percent to 1.35 percent.
The average maturity of the total debt was shortened from 2.76 years for the second quarter 2022 to 2.64 years for the third quarter. The average period of fixed interest, including derivatives, was also shortened: from 2.77 years to 2.71 years. By using derivatives, the period of fixed interest was extended from 1.56 years to 2.71 years.
– Movements continue to be large. From the third quarter 2021 to the third quarter 2022, the average interest rate, including derivatives, on new transactions increased from 0.25 percent to 2.09 percent. This is now starting to have substantial effects for the total debt and thereby on the overall interest costs that municipalities and regions have to manage, says Erik Törnblom, acting Head of Research at Kommuninvest.
From the third quarter 2022, the report is based on an expanded sample of loans and derivatives. The time series have been adjusted on the basis of the new sample size.
Local Government Debt Management Q3 2022
For further information
Erik Törnblom, acting Head of Research, tel: +46 10 470 87 41, e-mail: erik.tornblom@kommuninvest.se
David Ljung, Head of Communications, tel: +46 73 068 45 45, e-mail: david.ljung@kommuninvest.se
Topics
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 the start in 1986, the Kommuninvest collaboration has helped reduce the local government sector’s borrowing costs by many billion SEK. Currently, 294 municipalities and regions are members of this voluntary cooperation. With a balance sheet total of close to SEK 600 billion (USD ~55 billion), Kommuninvest is the largest lender to the local government sector and one of the ten largest credit institutions in Sweden. The head office is located in Örebro.
