The Government of Norway has today submitted a proposal to increase the equity capital of Kommunalbanken (KBN) with NOK 750 million. This capital increase would enable KBN to lend up to an extra NOK 25 billion to the local government sector.
At a press conference held 12:00 today, the Norwegian government presented a range of new economic measures as a result of the coronavirus outbreak. One of the measures is to inject NOK 750 million of new equity into KBN “to help the markets to function as well as possible and to prevent municipalities’ refinancing of short-maturity securities from contributing to further stress in the markets”.
One of the consequences of the coronavirus outbreak has been turmoil in the capital markets, and a number of municipalities have experienced difficulty in refinancing their loans in the market.
In the current situation Norway’s municipalities are facing major challenges in dealing with COVID-19. As the largest provider of debt financing to Norwegian municipalities, KBN stands ready to help them to continue to provide welfare services by solving their financing needs, comments Lars Strøm Prestvik, Chief Lending Officer at KBN.
“The government’s proposal will enable KBN to refinance a significant amount of the local government sector debt that is due to mature between now and the summer. We will primarily be refinancing these short-term loans by providing loans with longer maturities”, explains Lars Strøm Prestvik.
The measure proposed by the government was today submitted in a bill (Prop. 67 S) to the Norwegian Parliament .