10 May 2024

NIB renews the Municipal Guarantee Board’s revolving credit agreement

Nordic Investment Bank (NIB) and the Municipal Guarantee Board have agreed to extend their EUR 200 million revolving credit agreement for five years. The credit strengthens the financing arrangements of Finnish municipalities, which finance investments in social housing, schools and public services.

The five-year revolving credit agreement originally signed in 2019 will mature in June this year. The Municipal Guarantee Board prepares for the expiry of the agreement by renewing the revolving credit agreement with NIB for a further five-year period. The agreement enables the financing mechanism of the municipal sector to benefit from NIB’s AAA credit rating, which supports the liquidity of municipalities and indirectly the investments made by municipalities in public services.

The purpose of the Municipal Guarantee Board is to secure joint municipal funding and to develop it in Finland. The Municipal Guarantee Board provides guarantees to credit institutions controlled by municipalities under the conditions laid down in the Municipal Guarantee Board Act, subject to adequate collateral. There is currently one credit institution referred to in the Municipal Guarantee Board Act, Municipality Finance Plc.

Municipality Finance Plc is a credit institution owned by municipalities, Keva and the state, which specialises in the financing of local government in Finland and the management of financial risks. With the funding, Finnish municipalities and wellbeing services counties can implement large-scale social infrastructure development projects, such as construction and maintenance projects for hospitals, schools and kindergartens.

All 293 municipalities in mainland Finland are members of the Municipal Guarantee Board established by the Finnish Parliament in 1996. Moody’s and S&P have given the Guarantee Board a credit rating of Aa1/AA+, reflecting its strong financial foundation and important role in the development of national infrastructure.

The Nordic Investment Bank (NIB) is an international financial institution owned by eight member countries (Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden). It finances private and public investment projects both in and outside its member states. Leading credit rating agencies Standard & Poor’s and Moody’s have given NIB the highest possible credit rating of AAA/Aaa.

For more information:
Jim Dahlström, Senior Banker, Financial Institutions, tel. +358 10 618 0334, jim.dahlstrom@nib.int

Iiris Anttalainen, Communications, tel. +358 10 618 0257, iiris.anttalainen@nib.int

Related resources

10 May 2024

Municipal Guarantee Board

EUR 200 million