Kommuninvest has issued a new bond, called K2311, in its Swedish Benchmark programme. The bond met solid demand and was immediately granted benchmark bond status with an issued volume of just over SEK 3 billion.
Including K2311, due on November 13, 2023, Kommuninvest has nine outstanding bonds in its Swedish Benchmark Programme, with annual maturities stretching from 2018 to 2024. The total outstanding volume in the programme amounts to over 170 billion Swedish krona and a balanced continued good growth is expected.
Strong demand caused the issue to be over-subscribed, and the price was set at True ASW + 9 basis points.
Christian Ragnartz, Head of Debt Management at Kommuninvest, is pleased with the result, but also points out that Kommuninvest’s bonds are priced differently in relation to the Swedish sovereign, depending on whether the issue takes place in Swedish krona or in foreign currency, such as USD.
– I’m not overly surprised that we met good demand, considering that the spread against Swedish government bonds in this transaction amounts to about 60 basis points. In the international context, this is a relatively large spread given that credit risk is the same. A corresponding transaction in US dollars would have meant a considerably lower spread compared with Swedish government bonds.
Christian Ragnartz sees favorable conditions to lower funding costs for Kommuninvest in Sweden, and for Kommuninvest to become an even more obvious complement to investments in Swedish government bonds. The fact that Kommuninvest’s bonds as of March 12 are included in the broadest bond index, Nasdaq OMRXALL, is a milestone and an important interim objective.
Kommuninvest’s ambition, similar to the National Debt Office, is to be transparent and predictable in borrowing. In addition, Kommuninvest actively works to include more market makers and reach an even broader investor base.
Kommuninvest continues to grow as a consequence of increased market share and increased investments in welfare by municipalities, county councils and regions. Today Kommuninvest funds more than half of the municipal sector’s total debt of over SEK 600 billion.
Kommuninvest’s borrowing strategy means that more than half of total borrowing can take place in Swedish kronor. Kommuninvest expects total new funding of SEK 85-100 billion in long-term borrowing during the year.
Kommuninvest is the municipality’s and county council’s own lending institution. Kommuninvest is owned by 288 Swedish municipalities and county councils to support their financial management through stable and cost-effective financing, skills development and collaboration. Kommuninvest is the largest lender for Swedish municipalities and county councils with more than SEK 300 billion in lending.
For further information
Christian Ragnartz, Head of Debt Management, tel: +46 (0) 10 470 87 06,
Pelle Ekestubbe, Senior Portfolio Manager, tel: +46 10 470 88 62
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