Press release -
The interest rate hike continues, but at a lower pace
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 2023.
The report is built on Kommuninvest's lending and transactions registered by municipalities and regions, as well as their companies, in the debt management system KI Finans. The data set for the third quarter 2023 consists of 8540 loans, certificates and bonds with a total value of SEK 628 billion as well as 1 587 derivatives linked to underlying loans totaling SEK 193 billion.
New transactions in the third quarter 2023
The average interest rate for new transactions, including derivatives, increased from the second to the third quarter 2023 from 3.73 to 4.15 percent.
The average maturity of new transactions was shortened from 2.94 years for the second quarter 2023 to 2.13 years for the third quarter. At the same time, the average period of fixed interest, including derivatives, was shortened from 2.41 years to 1.83 years.
Total debt
The average interest rate for the total debt, including derivatives, increased from 2.18 percent in the second quarter to 2.31 percent in the third quarter 2023. The average interest rate excluding derivatives increased from 2.78 to 3.02 percent.
The average maturity decreased from 2.57 years for the second quarter to 2.43 years for the third quarter 2023. The average period of fixed interest, including derivatives, also decreased: from 2.66 years to 2.57 years. By using derivatives, the period of fixed interest was extended from 1.47 years to 2.57 years.
– Higher market interest rates continue to have an impact on the municipal sector's borrowing costs. The increase in the average interest rate during the third quarter was certainly significantly lower than the previous quarter, but this is largely due to fewer transactions. We expect that the average interest rate will continue to rise in the coming quarters, says Erik Törnblom, acting Head of Research at Kommuninvest.
Local Government Debt Management Q3 2023
For further information
Erik Törnblom, acting Head of Research
Phone: +46 70 279 17 21
E-mail: erik.tornblom@kommuninvest.se
Victoria Preger, Chief Communication Officer
Tel: +46 70-266 87 26, e-mail: victoria.preger@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, 295 municipalities and regions are members of this voluntary cooperation. With a balance sheet total of more than 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.
