Quarterly report on Local Government Debt Management: Average interest rate rises while capital maturity remains short

The report is based on Kommuninvest’s lending and transactions registered by municipalities, regions and their companies in the debt management tool KI Finans. The data cover more than 75 per cent of the local government sector’s total borrowing. The data for the second quarter of 2026 include 9,928 loans, certificates and bonds, for a total amount of SEK 754 billion, and 1,696 financial derivatives corresponding to SEK 220 billion.

The average interest rate in the sector was 2.52 per cent including derivatives, compared with 2.48 per cent in the previous quarter. Of total borrowing, 42 per cent is linked to floating interest rates, primarily three-month STIBOR. The average capital maturity was 2.68 years, while the average interest maturity, including derivatives, was 2.81 years.

Capital maturity in the local government sector remains short. 26 per cent of the debt matures within 12 months, of which 13 per cent consists of certificates and short-term loans that are typically renewed several times per year. Only 8 per cent of the debt has a remaining maturity longer than five years. The short capital maturity means that investments are often financed with funding that is renewed several times during their economic lifetime.

The use of interest rate derivatives helps extend interest maturity. Excluding derivatives, the average interest maturity is 1.76 years, reflecting the high share of floating-rate loans with short interest maturity. Overall, this means that the local government sector is sensitive to changes in the interest rate environment.

– The key indicators of local government debt management have remained relatively stable in recent periods, reflecting a financial market environment that has been comparatively stable relative to the conditions seen a few years ago. In this quarter’s in-depth analysis, we examine whether, and if so how, debt management differs between municipalities of different sizes and whether this affects financing costs, says Viktor Johansson, Analyst at Kommuninvest.

New borrowing during the quarter amounted to SEK 79 billion in loans, bonds and certificates, and SEK 13 billion in derivatives. The average interest rate on new borrowing was 2.6 per cent. The average capital maturity on new borrowing was 3.07 years, while the interest maturity including derivatives was 2.49 years.

Link to the report: Local Government Debt Management – second quarter of 2026

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