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 and government securities for market maintenance purposes. The interest is set in relation to the Riksbank’s repo rate.
- Repos (T/N) 40 basis points below the Riksbank’s repo rate
- Repos (O/N) 45 basis points below the Riksbank’s repo rate
For nominal government bonds and inflation-linked bonds, there is no limitation in terms of volume. For treasury bills, the volume is limited to SEK 5 billion per primary dealer, including T/N (Tomorrow/Next) repos and repo switches.
Repos in newly introduced bonds
New nominal government bonds have special terms for 10 basis points below the Riksbank’s repo 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 repo rate
Extended repo-swap facility for nominal government bonds during 2020
The Debt Office has decided to offer an extended facility for market-supporting repo swaps in nominal government bonds during the period 1 January – 1 December 2020.
The extended facility means that the limited volume for repo swaps is increased from SEK 2 billion to SEK 4 billion per nominal government bond and primary dealer. Also, the interest which is set in relation to the Riksbank’s repo rate will be reduced from 30 to 20 basis points. The repo swaps will be executed cash neutral, in multiples of SEK 500 million and are valid for one week.
The extended facility will be evaluated and may be prolonged.
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 500 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.
The facility is closed on days when the Debt Office and the Riksbank are holding auctions with inflation-linked bonds.