Limits - lending

The board of directors of Kommuninvest i Sverige AB annually sets the lending limit for all members of the Kommuninvest Cooperative Society. The limit is equivalent to the debt level of the municipality which has the 14^th highest net group liability per inhabitant (the 95^th percentile). In April 2010, the limit amounted to SEK 104,000 per inhabitant. For member county councils, the limit is 50 percent of that for municipalities.

The net groupliability is calculated as the sum of the municipal corporation's liabilities, provisions and contingent liabilities for pensions, less cash and equivalents (cash, bank deposits and current investments).

Who can obtain credit?

Kommuninvest's products and services are only available to members of the Kommuninvest Cooperative Society, companies in which members are majority shareholders, as well as inter-authority cooperatives whose members are all also members of Kommuninvest. Credits to borrowers that are not municipalities or county councils (for example, companies, foundations or inter-authority associations) require that a member of the Kommuninvest Cooperative Society guarantees all of the borrower's obligations towards Kommuninvest.

Raised limits

Where necessary, the board of directors may approve a raised credit limit for a member. This decision is based on an assessment of the local authority in question demonstrating that a raised limit can be motivated for special reasons. "Special reasons" primarily entails the member having assets that motivate a higher leverage. Examples of such assets are those whose market value can be assumed to significantly exceed their book value, such as energy, land or property assets.

Assets in the form of long-term agreements can also represent special reasons motivating a raised limit. An example of this is where members implement and finance investments in properties rented by the government through state-owned companies or authorities, or infrastructure investments in which the government is the final financier. Beyond the special reasons, the general financial status of the member is also taken into account.

Loan embargoes

If a member's net group liability exceeds the set limit, a loan embargo is activated. However, the member may renew older credits from Kommuninvest or other creditors as long as it can be ascertained that the net group liability has not increased.