Credit risk

Credit risk arises from cash fund investments and market values of derivative positions. Credit risk is managed with limits and collateral with respect to both cash investments and market values of derivatives. The government requires high counterparty credit ratings and the guidelines set by the Ministry of Finance define minimum credit ratings. Investing cash with triparty repo contracts is a means to reduce credit risk associated with cash investments.

The State Treasury uses cash collateral to reduce the credit risks arising from the market values of derivatives. Like many other sovereign borrowers, Finland uses collateral agreements under the ISDA agreements (CSA, Credit Support Annex). These are two-way collateral agreements where both parties are obliged to provide collateral against the market values of derivative positions.

, Updated 23.2.2024 at 12:56