|2011/2012 funding volume||US$13BN/US$17-20BN|
|AUD volume 2011/2012||A$325M/A$150M (full year/to Jun 30)|
|Issuance % by currency||JPY 39%; SEK 37%; USD 1 1%; AUD 5%; NOK 3%; EUR 1%; Other 4% (calendar year 2011)|
|USD benchmark size||US$6.5BN|
|EUR benchmark size||N/A|
|RBA repo eligible?||Yes|
|RBNZ repo eligible?||N/A|
Kommuninvest is responsible for the coordinated procurement of financing by Swedish municipalities and county councils. It is owned by 270 municipalities and county councils with the purpose of supporting their financial operations through secure and cost-efficient financing, financial advice, skills development and coordination.
Municipalities and county councils that are members of the Kommuninvest Cooperative Society have signed an unlimited and several guarantee covering all Kommuninvest's current and future commitments. Beyond this explicit guarantee, Kommuninvest is also covered by an implicit state guarantee, which has been tested in court. The implicit state guarantee rests on a number of factors:
• Swedish municipalities and county councils cannot be declared bankrupt or cease to exist, which has been tested in court. Only the Swedish Parliament (Riksdag) may make decisions on the merging of municipalities or county councils. In the event of such a merger, responsibility for assets and liabilities is transferred to another local government. The same applies to the division of local governments.
• The ban on pledging municipal or county council property means the local authorities assume responsibility for their commitments with the full backing of their tax levy and combined assets.
• Although local self government is strong in Sweden, the state bears the ultimate responsibility for the country's collective public operations developing in socioeconomic equilibrium.
Kommuninvest's capital coverage ratio is 5.71. In 2010 Kommuninvest increased the capital base by SEK1 billion through the issue of a subordinated loan to the members of Kommuninvest Cooperative Society. The purpose was to strengthen Kommuninvest's preparedness for exceptional financial events and to improve the conditions for meeting future regulatory capital requirements. Effective from the 2011 financial year Kommuninvest will apply refunds of surpluses to make visible the results of Kommuninvest i Sverige AB to the owners/members of the Kommuninvest Cooperative Society. At the same time, a requirement to make an annual capital contribution has been introduced. This means that that the owners/members will be able to benefit from the earnings of Kommuninvest i Sverige AB without negatively affecting the company's capital base.
Kommuninvest aims to keep risk exposure low. The fundamental principle applied in managing risks is that the terms for borrowing and lending shall be equal in terms of risk. The intention is to eliminate the risks that arise in operations.
Kommuninvest's lending is financed through short- and long-term borrowing programmes in the national and international capital markets. Kommuninvest strives to maintain a presence in established capital markets, to be a well-known and reliable partner, and to build long-term relations with investors and securities dealers. Kommuninvest maintains a high degree of flexibility in its borrowing, allowing the issuer to meet investors' needs for securities and providing broad access to various credit markets. The funding target for 2012 is US$17-20 billion. The largest borrowing programmes are the Swedish bonds programme, the euro MTN programme, the ECP programme, the domestic CP programme, and the Kangaroo/Kauri programme.
AUD and NZD activity
Kommuninvest debuted in the Kangaroo bond market in 2011. There are now three maturities outstanding in AUD with a total of A$525 million. The intention is to continue to build an AUD benchmark curve.
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