Supervision
The change entails amendments to the Act on KommuneKredit which are expected to be incorporated in 2025 with effect from 1 January 2026. We expect that the Danish FSA will continue to be our supervisory authority.
Investor update: New funding model
As of May 2025, KommuneKredit’s funding will be provided directly by the Danish Government at sovereign funding rates. Going forward, Danmarks Nationalbank on behalf of the Danish Government must provide the needed funding to KommuneKredit. This will not affect existing bonds or KommuneKredit’s liability structure, which will still be backed by the joint and several liability of all Danish municipalities and regions.
About the new funding model
The new financing model entails that KommuneKredit has ceased to issue bonds in the capital markets. Going forward, Danmarks Nationalbank, on behalf of the Danish Government, must provide KommuneKredit with the funding required.
In short, this means that where KommuneKredit previously financed its lending by issuing bonds in the international capital markets, all future issuance will be in Danish Kroner and the only investor will be the Danish Government.
The new financing model entails no changes to the terms or security backing of existing KommuneKredit bonds.
It is a priority for KommuneKredit to ensure that the specifications and quality of our outstanding bonds are maintained, that investors will not experience any substantial change to their bonds and that they will remain high-quality and low-risk assets.
Credit quality
The understanding between the Danish Government and KommuneKredit entails that no changes will be made to the terms of or the security backing existing bonds issued by KommuneKredit. All bonds previously issued by KommuneKredit will continue to represent the same credit quality as before the announcement.
Government relation
The Danish Government now gives KommuneKredit unlimited access to funding. Besides, the guarantee structure supporting KommuneKredit is unchanged.
Guarantee unaffected by the change
The liability structure of KommuneKredit, whereby all Danish municipalities and regions are jointly and severally liable for KommuneKredit’s obligations, remains unchanged. This follows from the Act on KommuneKredit and safeguards all existing and future creditors, including bondholders.
Sustainability
Sustainability is still at the heart of KommuneKredit. Thus, it is essential to KommuneKredit to ensure that investors experience that, also in the sustainability space, they still hold the high-quality asset that they initially invested in.
Supporting the liquidity
At KommuneKredit we fully understand the need to support valuation and liquidity in our outstanding bonds. We also understand the role that new issuance plays in the valuation of existing bonds and the future valuation uncertainty caused by the lack of new bond issuance.
How will this affect the issuance of Danish government bonds?
Will this alter the maturities used for Danish government bonds?
Will this increase the volume of Danish government bonds?
Will this increase the volume of Danish government bonds in foreign currency?
Questions about Danish government bonds
At KommuneKredit we acknowledge that numerous questions will arise on the back of this change, especially questions related to the effect that this change will have on the future issuance of Danish government bonds. KommuneKredit cannot answer questions related to the behavior of Danmarks Nationalbank. Any questions should therefore be directed to Danmarks Nationalbank.
Go to the website of Danmarks NationalbankFurther questions & support
If you have any questions regarding our new funding model, outstanding bonds, or related matters, please feel free to reach out for further clarification.
Senior Funding & IR Manager