Quarterly report on Local Government Debt Management: Capital maturities are rising – signs of a shift toward long-term strategy

The report is based on Kommuninvest's lending and transactions registered by municipalities and regions, as well as their companies, in Kommuninvest’s debt management tool KI Finans. The data for the second quarter of 2025 includes 9,412 loans, certificates and bonds for a total amount of SEK 703 billion, and 1,673 financial derivatives corresponding to SEK 210 billion.

The average interest rate in the sector rose by 10 basis points during the quarter, from 2.32 to 2.42 percent. The average capital maturity was 2.52 years, and 25 percent of the debt matures within 12 months. The average interest rate maturity, including derivatives, was 2.75 years.

Recent quarters show early signs that capital and interest maturities may be trending upward again. The share of new transactions with capital maturities exceeding four years has gradually increased since the clear decline during the period of rising interest rates in 2021 and 2022. This suggests that the local government sector is once again beginning to prioritize long-term debt management, following a period of shorter maturities driven by interest rate concerns and market volatility.

– The fact that the sector’s debt portfolios are moving toward longer capital and interest maturities is a positive development from a risk management perspective. After several years of shorter maturities, preferences for longer durations now appear to be returning, which strengthens the sector’s resilience to future interest rate changes, says Viktor Johansson, Analyst at Kommuninvest.

The report shows that capital and interest maturities previously declined rapidly in response to rising inflation and interest rates, as many actors opted for shorter durations to manage uncertainty.

At the same time, there is clear variation within the sector. Municipalities with stronger finances tend to choose longer maturities, while those with higher interest rate sensitivity often opt for shorter durations – a pattern that may increase risk exposure and raises questions about how the sector can be supported in making more sustainable choices.

Local Government Debt Management Q2 2025

For further information:

Viktor Johansson, Analyst, phone: +46 10 470 87 67
e-mail: viktor.johansson@kommuninvest.se

Victoria Preger, Chief Communication Officer, phone: +46 70 266 87 26
e-mail: victoria.preger@kommuninvest.se