16 Jan 2020
EUR 100.3 million
Industries and services
|Date of agreement:||27 Jun 2019|
|Customer:||Municipal Guarantee Board|
|Amount in EUR:||EUR 200 million|
|NACE sector / loan type:||Financial intermediation, except insurance and pension|
|Business area:||Financial institutions and SMEs|
The loan has been provided to set up a stand-by credit facility for the Finnish Municipal Guarantee Board (MGB).
The MGB’s purpose is to safeguard and develop the joint funding of municipalities. To fulfil its purpose, the MGB guarantees the obligations of the senior debt programmes of the publically owned Municipality Finance Plc, or MuniFin, one of Finland’s largest credit institutions that is specialised in the financing and financial risk management of the public sector. Finnish municipalities use funding from MuniFin for investments in services such as social housing, education, healthcare and care for the elderly.
Should the MGB be required to pay on its guaranties, it would inject capital to MuniFin to ensure its solvency. In order to safeguard its own liquidity, the MGB therefore has to have sufficient reserves and the stand-by credit facility as a temporary back up as all Finnish mainland municipalities are ultimately jointly responsible for the MGB guarantee in relation to their population.
The Finnish Municipal Guarantee Board is a government-related entity, established in 1996 by the Finnish Parliament. The MGB has 295 member municipalities, representing all Finnish municipalities with the exception of Åland. The MGB has received a Aa1/AA+ rating from Moody’s and S&P.
MuniFin and the MGB together form the funding system for Finnish local and regional governments and are robust institutions supported by highly creditworthy members/owners and borrowers. NIB’s credit facility adds value by increasing MGB’s flexibility and by improving the quality of its liquidity profile. The facility supports the credit profile of the MGB, and is expected to indirectly support municipal investments in Finland.
No negative sustainability issues have been identified.