Market-supporting repos and switches
The Debt Office offers various facilities to support market functioning. We offer our primary dealers short-term loans of government securities through repos. This allows the primary dealers to sell government securities to investors without risking a shortage of supply.
The standing repo facility is governed by demand and is offered irrespective of the borrowing requirement. In order to utilise the repo facility, the primary dealers pay a premium in relation to the Riksbank’s policy rate. This means that the Debt Office borrows at an interest rate that is lower than the policy rate.
Continual repos in government securities
The Debt Office offers repos in government securities for market maintenance purposes. The interest is set in relation to the Riksbank’s policy rate.
- Repos (T/N) 40 basis points below the Riksbank’s policy rate
- Repos (O/N) 45 basis points below the Riksbank’s policy rate
For nominal government bonds, inflation-linked bonds and treasury bills, there is no limitation in terms of volume.
Repos in newly introduced bonds
New nominal government bonds have special terms for 10 basis points below the Riksbank’s policy rate. These terms apply for no more than the volume that is equivalent to the difference between SEK 20 billion and the issued volume. The volume is evenly distributed between primary dealers.
The Debt Office offers primary dealers the opportunity to borrow a bond or a treasury bill against the lending of another government security for one week – this is called a repo swap. The switch is cash neutral.
Repo swaps of government securities are valid for one week in multiples of SEK 500 million and up to SEK 2 billion per government security and primary dealer.
- Repo swaps (T/N) 30 basis points below the Riksbank’s policy rate
Expanded volume of repo-swap facility for nominal bonds
At the end of 2019, the Debt Office decided to expand the facility for market-supporting repo swaps in nominal government bonds by raising the maximum volume and lowering the price. From the 8th of June 2022 the price is set to 20 basis points below the Rikbank’s policy rate. The price of 20 basis points and the volume cap of SEK 4 billion will remain until the 31st of May 2023. The swaps are executed cash neutral, for one week and in multiples of SEK 500 million.
Switching inflation-linked bonds
Primary dealers have the possibility of switching inflation-linked bonds via the Debt Office. Switching rates are based on current market rates and demand as well as on a certain premium. Primary dealers are permitted to make switches to a value corresponding to no more than SEK 150 million per calendar week. The switches may be price-risk, nominal or cash neutral. The facility is cancelled when the bond is shorter than one year or according to what the Debt Office has communicated.
The facility is closed on days when the Debt Office and the Riksbank are holding auctions with inflation-linked bonds.