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As filed with the Securities and Exchange Commission on May 20, 2009

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

For the transition period from                       to                        

Commission file number: 001-8382

Securities registered or to be registered pursuant to Section 12(b) of the Act:

See list on following pages

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes    o No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes    x No

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

x Yes    o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17    o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes    x No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

o Yes    o No

Securities registered or to be registered pursuant to Section 12(b) of the Act:

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INTRODUCTORY NOTES

In this annual report on Form 20-F (the “annual report”), unless otherwise specified, all amounts are expressed in Swedish kronor (“Skr”). See Item 3, “Key Information”, for a description of historical exchange rates and other matters relating to the Swedish kronor.

In this annual report, unless otherwise indicated, all descriptions and financial information relate to Aktiebolaget Svensk  Exportkredit (Publ) (Swedish Export Credit Corporation) as a whole, including the “State Support System” (the “S-system”), which is described in detail herein. In certain instances, information relating to the S-system on a stand-alone basis is provided separately. The consolidated financial statements of SEK comprise SEK and its wholly-owned subsidiaries AB Sektionen, AB SEK Securities, SEK Financial Advisors AB, SEK Financial Services AB, SEK Customer Finance AB, SEK Exportlånet AB and Venantius AB (including its wholly-owned subsidiary VF Finans AB) (the “Subsidiaries”). SEK and the Subsidiaries are together referred to as the “Consolidated Group” or the “Group” (“SEK” or the “Company”).

SEK is a “public company” according to the Swedish Companies Act. A Swedish company, even if its shares are not listed on an exchange and are not publicly traded, may choose to declare itself a “public company”. Only public companies are allowed to raise funds from the public through the issuance of debt instruments. In certain cases (including that applicable to SEK), a public company is required to add the notation “Publ” to its name.

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements.  We have based these forward-looking statements on our current expectations and projections about future events. These statements include but are not limited to:

·                                           statements regarding financial projections and estimates and their underlying assumptions;

·                                           statements regarding plans, objectives and expectations relating to future operations and services;

·                                           statements regarding the impact of regulatory initiatives on the Company’s operations;

·                                           statements regarding general industry and macroeconomic growth rates and the Company’s performance relative to them; and

·                                           statements regarding future performance.

Forward-looking statements generally are identified by the words “expect”, “anticipate”, “believe”, “intend”, “estimate”, “should”, and similar expressions.

Forward-looking statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement in light of new information or future events, although the Company intends to continue to meet its ongoing disclosure obligations under the U.S. securities laws (such as the obligations to file annual reports on Form 20-F and reports on Form 6-K) and under other applicable laws. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and generally beyond the Company’s control. You are cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in, or implied by, forward-looking statements. These factors include, among others, the following:

·                                           changes in general economic business conditions, especially in Sweden;

·                                           changes and volatility in currency exchange and interest rates;

·                                           dislocations or turmoil in one or more segments of the financial markets; and

·                                           changes in government policy and regulations and in political and social conditions.

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PART I

ITEM 1         IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not required as this 20-F is filed as an Annual Report.

ITEM 2.        OFFER STATISTICS AND EXPECTED TIMETABLE

Not required as this 20-F is filed as an Annual Report.

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ITEM 3         KEY INFORMATION

A                   Selected Financial Data

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and related notes. The consolidated income statement data for the years ended December 31, 2008, 2007 and 2006 and the consolidated balance sheet data as of December 31, 2008 and 2007 has been derived from SEK’s consolidated financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standard Board (IASB), and also as adopted by the European Union (herein “IFRS”).

While complying with IFRS, SEK also complies with additional requirements of the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559) (ÅRKL), the recommendation RFR 1.1-Supplementary Accounting Principles for Groups, issued by the Swedish Financial Reporting Board (RFR) and the accounting regulations of the Swedish Financial Supervisory Authority (FFFS 2006:16).

Note that selected financial data for the earliest two years (December 31, 2004 and December 31, 2005) have been omitted due to SEK’s transition to IFRS in fiscal year 2007, which made it impracticable to prepare comparable data for the earlier periods. SEK presented its financial statements in accordance with IFRS for the first time in 2007, while the opening balance for IFRS has been established as of January 1, 2006.

SEK has restated its consolidated IFRS financial statements as of December 31, 2007 and for the years ended December 31, 2007 and 2006, respectively, in order to correct certain technical errors in the marking to market of a number of derivative positions, assets and liabilities required to be reported at fair value. The changes have the overall effect of reducing previously reported net income for 2007 and 2006, while increasing previously reported shareholder’s equity for those years. The changes in profit and loss primarily appear in net result of financial transactions and primarily reflect unrealized value changes due mainly to technical difficulties in correctly valuing hedged transactions where the hedged instrument has been replaced with a new instrument, and also due to corrections of credit spreads where the unrealized value change related to such credit spreads is presented through the profit and loss. A number of these changes also affect the balance sheet, which has also been restated to correct technical errors in the classification of certain items (which errors had no impact on total equity).

The net effect of the restatement has resulted in a reduction of previously reported net income for 2007 by Skr 7.1 million and has reduced previously reported net income for 2006 by Skr 85.0 million. Conversely, the Company’s shareholder’s equity as of December 31, 2007 has increased by Skr 113.9 million and shareholder’s equity as of December 31, 2006 has increased by Skr 121.0 million. Furthermore, shareholder’s equity upon SEK’s transition to IFRS, as of January 1, 2006, has increased by Skr 206.0 million. For additional information on the restatement, see Note 34 to the Consolidated Financial Statements included in Item 18.

The following information should be read in conjunction with the more detailed discussion contained in Item 5 “Operating and Financial Review and Prospects”.

Selected Financial Data

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Foreign Exchange Rates

The Company’s reporting currency is the Swedish kronor (“Skr”). The following table sets forth, for the periods and dates indicated, information concerning the noon buying rate for the Swedish kronor, expressed in Skr’s per $1.00.

The term “noon buying rate” refers to the exchange for kronors, expressed in kronors per U.S dollar, in the city of New York for cable transfers payable in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.

(A)         The average of the exchange rates on the last day of each month during the period.

The following table sets forth for the months indicated certain information concerning the exchange rate for Swedish kronor as against the U.S. dollar based on the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.

The noon buying rate on May 15, 2009 was USD 1 = Skr 7.8593

No representation is made that Swedish kronor amounts have been, could have been or could be converted into U.S. dollars at the foregoing rates on any of the dates indicated.

B.                  Risk factors

Disruptions in the financial markets or economic recession may have an adverse effect on SEK’s ability to repay its debt.

SEK’s financial performance, as represented in its balance sheet and income statement, may be adversely affected by a number of factors, many of which are outside the Company’s control. Recent disruptions in the international financial markets and the on-going worldwide recession have had and may continue to have both a direct and indirect impact on SEK’s business volumes, profitability, asset quality and its ability to finance its operations, which may reduce the Company’s ability to repay its debt.

SEK is exposed to credit risk even in normal economic circumstances. Disruptions in the financial markets or economic recession may further affect the credit quality of borrowers and other credit risk counterparties negatively, which may cause credit losses or affect the value of assets.

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Risks arising from the credit quality of borrowers and counterparties and the recoverability of loans and amounts due from counterparties in derivative transactions are inherent in SEK’s businesses. Consequently, SEK may incur credit loss or delinquent debt situations even in normal economic circumstances. Financial market disruptions or economic recession, such as the world is now experiencing, may further affect SEK’s customers and counterparties negatively reducing their ability to fulfill obligations, as SEK already experienced with the collapse of Lehman Brothers and the Icelandic banks during 2008. The current market and economic disruptions have affected, and may continue to affect, business and consumer spending, bankruptcy rates and asset prices, among other factors, creating a greater likelihood that more of SEK’s customers or counterparties could require less credit or become delinquent in their loans or other obligations to SEK.  SEK has recorded reductions in the fair value of some of its assets in 2008, and may, in 2009 or future periods, be forced to write down the value of some of its assets as a result of continuing disruptions in the financial markets.   Further disruptions may affect the recoverability and value of SEK’s assets and require an increase in SEK’s provision for delinquent and defaulted debt and other provisions.   .

Reduced access to international capital markets for financing of SEK’s operations at a desired interest rate may have a negative impact on SEK’s profitability and ability to fulfill its obligations.

In order to finance its operations, SEK is dependent on the international capital markets, where it competes with other issuers to obtain financing. Although SEK has been able to successfully finance its operations, factors outside SEK’s control may have a material adverse effect on the Company’s continued ability to obtain such financing or make the cost of such financing increase. The recent market turmoil and ongoing worldwide recession have made it very difficult for many issuers to obtain financing, especially with longer maturities, and SEK has to some extent had to reduce the maturity profile of its current borrowing. Continued market disruptions may make such funding more expensive and difficult to obtain, consequently reducing the Company’s profitability and ability to fulfill its obligations.

A key factor affecting the cost and availability of financing is SEK’s credit rating. Although the Company currently has favorable credit ratings from various credit rating agencies, those credit ratings depend on many factors, some of which are outside of SEK’s control. Factors that are significant in determining SEK’s credit ratings or that otherwise could affect its ability to raise financing include its ownership structure, asset quality, liquidity profile, short and long-term financial prospects, risk exposures, capital ratios, and prudential measures, as well as government support and SEK’s public policy role. Deterioration in any of these factors or any combination of these factors may lead rating agencies to downgrade SEK’s credit ratings. If the Company was to receive a downgrade in its credit ratings, it would likely become necessary to offer increased interest rates in the capital markets in order to obtain financing, which would likely substantially lower the Company’s profit margins and earnings, harm its overall liquidity and negatively affect its business and ability to fulfill its obligations.

SEK may experience a negative change in the value of its assets or liabilities and may incur other losses related to volatile and illiquid market conditions.

Market volatility, illiquid market conditions and disruptions in the credit markets have made it difficult to value certain of SEK’s assets and liabilities. Subsequent valuations, in light of factors then prevailing, may result in significant changes in the values of such assets or liabilities in future periods. In addition, at the time of any sales of such assets, the price SEK ultimately realizes will depend on the demand and liquidity in the market at that time and may be materially lower than their current fair value. Any of these factors could require SEK to negatively change the carrying amount of such assets or liabilities, which may have an adverse effect on the Company’s financial condition in future periods.

SEK’s hedging strategies may not prevent losses.

SEK is constantly attempting to manage interest rate, currency, credit and other market-related risks, as well as refinancing risks. If any of the variety of instruments and strategies the Company uses to hedge its exposure to these various types of risk is not effective, the Company may incur losses, impairing its ability to timely repay or refinance its debts. The Company may not be able to obtain access to economically efficient hedging opportunities that will enable it to carry on its present policies with respect to new assets and liabilities. Disruptions such as the prevailing market crisis and economic recession may impose further strain on the availability and effectiveness of SEK’s hedging activities and could have an adverse effect on its financial condition and ability to fulfill its obligations.

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Fluctuations in foreign currency exchange rates could harm SEK’s business.

As an international lending institution, the Company is subject to currency risk. The adequacy of the Company’s financial resources may be impacted by changes in currency exchange rates that impact the value in Swedish currency of the Company’s foreign-currency obligations. The values of a majority of the items presented in the balance sheet are subject to fluctuations as a result of changes in the U.S. dollar/Swedish krona and the euro/Swedish krona exchange rates. Even though the Company carefully monitors and hedges its foreign currency exposures, changes in currency exchange rates adverse to the Company could harm SEK’s business, its profitability and its ability to repay its debts. Also, a strengthening of the Swedish krona against other currencies may reduce demand for the products from SEK’s customers and thus reduce demand for its loans.

Increasing competition may adversely affect SEK’s income and business.

Competition in the Company’s business is based on service, product innovation, product features, price, commission structure, financial strength and name recognition. The Company competes with a large number of other credit institutions, including domestic and foreign banks. Some of these institutions offer a broader array of products, may have more competitive pricing and may have greater financial resources with which to compete. Increasing competition may have significant negative effects on the Company’s financial performance if the Company is unable to match the products and services of its competitors or has to impose negative changes to its prices or rates in order to compete for customer business, investments or financing.

We have restated our financial results for 2007 and 2006. Operational risks such as material weaknesses and other deficiencies in internal control over financial reporting and disclosure processes could result in errors, affect operating results and cause investors to lose confidence in our reported results.

SEK has restated its consolidated IFRS financial statements as of December 31, 2007 and for the years ended December 31, 2007 and 2006, respectively, in order to correct certain technical errors in the marking to market of a number of derivative positions, assets and liabilities required to be reported at fair value. The changes have the overall effect of reducing previously reported net income for 2006 and 2007, while increasing previously reported shareholder’s equity for those years. The changes in profit and loss primarily appear in net result of financial transactions and primarily  reflect unrealized value changes due mainly to technical difficulties in correctly valuing hedged transactions where the hedged instrument has been replaced with a new instrument, and also due to corrections of credit spreads where the unrealized value change related to such credit spreads is presented through profit and loss.    A number of these changes also affect the balance sheet, which has also been restated to correct technical errors in the classification of certain items (which errors had no impact on total equity).  For additional information on the restatement, see Note 34 to the Consolidated Financial Statements.

Operational risk can arise from fraud, errors by employees, failure to document transactions properly or to obtain proper internal authorization, equipment failures, natural disasters or the failure of external systems, for example, those of SEK’s suppliers or counterparties. SEK’s businesses are dependent on the ability to process complex transactions efficiently and accurately. Failure to address operational risk may lead to additional cost, loss or damaged reputation which may negatively affect customers’ and investors’ confidence, SEK’s business and financial performance.

SEK currently faces challenges because of deficiencies in our accounting infrastructure and controls and the operational complexities of our business. As a result of the restatement referred to above, SEK has identified a material weakness in internal control over financial reporting as of December 31, 2008.  The restatement, related material weakness and/or other control deficiencies could result in errors, affect operating results and cause investors to lose confidence in our reported results, thus affecting our ability to finance our business. For additional information on the material weakness, see Item 15T herein.

There are a number of factors that may impede our efforts to establish and maintain effective internal control and a sound accounting infrastructure, including: the complexity of our business activities and related IFRS requirements; uncertainty regarding the operating effectiveness and sustainability of controls; and the uncertain impacts of recent asset market volatility on the reliability of the models used to develop our accounting estimates. Controls and procedures, no matter how well designed and operated, provide only reasonable assurance that material errors in our financial statements will be prevented or detected on a timely

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basis. A failure to establish and maintain effective internal control over financial reporting increases the risk of material error and/or delay in our financial reporting.

Depending on the nature of a failure and any required remediation, ineffective controls could have a material adverse effect on our business. Delays in meeting our financial reporting obligations could affect our ability to maintain the listing of our securities on the national securities exchanges. Ineffective controls could also cause investors to lose confidence in our reported financial information, which may have an adverse effect on the trading price of our securities.

There is also a risk that SEK’s reputation will be damaged if SEK fails to comply with current legislation and best practice or in another manner fails to meet its commitments, even those that are not explicit. Although operational risks are reduced through active efforts relating to properly documented processes, adequate systems, risk culture, compliance with regulations, corporate governance and other factors supporting internal control, such procedures may not be effective in controlling each of the operational risks.

Changes in law or regulation may adversely affect SEK’s business

SEK’s business is subject to regulation and regulatory oversight. Any significant regulatory developments could have an effect on how SEK conducts its business and on SEK’s results of operations. SEK is subject to financial services laws, regulations, administrative actions and policies in each location in which SEK operates. This supervision and regulation, in particular in Sweden, if changed could materially affect SEK’s business, the products and services it offers or the value of its assets.

ITEM 4    INFORMATION OF THE COMPANY

A.                History and development of the Company

Aktiebolaget Svensk Exportkredit (Swedish Export Credit Corporation) (“SEK” or the “Company”) is a “public company” according to the Swedish Companies Act. It is wholly-owned by the Swedish state through the Ministry of Foreign Affairs (“Sweden” or the “State”).

SEK was founded in 1962 in order to strengthen the competitiveness of the Swedish export industry by meeting the need for long-term credits for both exporters and their foreign customers. SEK’s objective is to engage in financing activities in accordance with the Swedish Banking and Financing Business Act and in connection therewith primarily to promote the development of Swedish commerce and industry as well as otherwise engage in Swedish and international financing activities on commercial grounds.

The address of the Company’s principal executive office is AB Svensk Exportkredit (Swedish Export Credit Corporation), Västra Trädgårdsgatan 11B, Stockholm, Sweden; and the Company’s telephone number is  +46-8-613-83-00.  The Company’s authorized representative in the United States is the Consulate General of Sweden, One Dag Hammarskjöld Plaza, 885 Second Avenue, New York, NY 10017, and the telephone number thereof is (212) 583-2550.

B.                            Business Overview

SEK provides long-term sustainable financial solutions for the private and public sectors with the aim of promoting the development and international competitiveness of Swedish industry and trade. SEK’s mission is to secure access to financial solutions for export and infrastructure. Business activities include export credits, lending, structured financing, project financing, leasing, capital market products and financial advisory services. SEK offers its solutions to corporations and financial institutions as well as domestic and international investors. SEK extends credits, or loans, on commercial terms at prevailing fixed or floating market rates of interest in “SEK exclusive of the S-system”, and credits on State-supported terms at fixed rates of interest that may be lower than prevailing fixed market rates in the “State Support System” (the “S-system”). The S-system is administered on behalf of the State by SEK in return for compensation.

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From its roots and base in export credits, SEK’s product range has expanded to more broadly promote the development of Swedish commerce and industry and the Swedish export industry. Over the years, SEK has been active in the creation of new financial solutions. SEK’s clear niche specialization in long-term financial products, combined with its financial capacity and flexible organization, are key factors in the management of its operations. SEK’s borrowing activities in the international capital markets have given SEK expertise in financial instruments. This experience, together with maintaining credit quality and credit ratings (as of May 2009: AA+ from Standard & Poor’s and Aa1 from Moody’s Investors Service), has allowed SEK to offer its customers tailored products and what SEK believes are highly competitive terms.

SEK has intensified the broadening of both its range of services and customer base in recent years in response to changes in demand and the opportunities created by the development of new forms of cooperation and financial instruments. SEK also intermediates capital market products to third-party investors, and has also, to a greater extent, become involved as a financial advisor for international projects. The expansion of SEK’s services and customer base reflects SEK’s efforts to become a broader-range finance house with specialists in certain areas, while continuing to emphasize its traditional role as a long-term lender.

Despite the liquidity shortage that occurred during especially the latter half of 2008, much of the Swedish export industry continued to do well, and SEK experienced significant demand for financing. Developing economies, especially the Asian markets, are continuing their strong development, with increasing purchasing power and increasingly modern and developed infrastructure. The Swedish export industry is largely focused on infrastructure, telecoms, energy supply, transport and environmental technology — all areas that are enjoying strong demand in emerging economies. Access to financing is often the deciding factor in whether or not an export deal goes ahead.

In order to increase SEK’s ability to assist the Swedish export industry, the Swedish parliament decided to make a capital contribution of Skr 3 billion and allow SEK to receive the shares in the state-owned company Venantius, significantly increasing SEK’s lending capacity.Venantius AB is a financial institution with equity of Skr 2.4 billion as of the date of acquisition in December 18, 2008.   On January 26, 2009, the Swedish Fiancial  Supervisory Authority approved the increase in share capital and the new number of shares.  On February 4, 2009, the new issue of shares was registered at the Swedish Companies Registration Office.  SEK was also granted a credit facility of Skr 100 billion and parliament has also authorized the government to allow SEK to purchase state guarantees on commercial terms for its new borrowing up to Skr 450 billion. The decision meant that SEK was immediately able to pledge that it would provide additional financing for the Swedish export industry.

As of March 8, 2009, in connection with the resolution of a claim against Sparbanksstiftelsernas Förvaltnings AB (the “Borrower”), SEK came to an arrangement with the largest creditors to the Borrower, resulting in SEK assuming control over a total of 25,520,000 shares of Swedbank AB. The shares represent 3.3 percent of the share capital and votes in Swedbank AB. The fair value of the shares at the date of this annual report is well above the book value of the original claim of approximately Skr 500 million.

Since the early 1990s, SEK has been involved in Sweden’s fast-growing trade with the countries in the Baltic region. The overall goal is to contribute to the economic development in the region, while strengthening the presence of Swedish and other Nordic business. Within the framework of these activities there are also increased business opportunities that have been created by the enlargement in 2004 of the European Union to include new members from the Baltic region and Eastern Europe. The current economic crisis in the Baltics and the Eastern Europe has generally not affected SEK in a material way. Although the overall level of business activity in the region has fallen sharply, there is still considerable activity in the area where SEK is most active at the moment, namely advisory services related to infrastructure projects. SEK believes that its credit exposures towards the region, taking into account EKN-guarantees (a form of credit insurance provided by the Swedish State and described in more detail below) and other risk mitigating measures, are limited.

SEK believes that its relationships with domestic, Nordic and other international investors and partners strengthen its ability to develop financial solutions which meet its customers’ requirements. This network enables SEK to participate in co-financing arrangements and advisory assignments, as well as in benchmarking and cooperation in areas such as risk management and business systems.

SEK has not made any material capital expenditures, nor engaged in any material divestitures (including of interests in other companies) during the three financial years preceding the date of this report.

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a.                                Competition

SEK is the only institution authorized by the Swedish State to make export financing credits under the S-system. In that connection, and with support from the State, SEK helps Swedish export companies compete with other export companies within OECD member countries which have similar support from their respective domestic export credit agencies, which also provide government-supported export credits. Lending from SEK exclusive of the S-system, including infrastructure credits provided mainly to municipalities, faces competition from other Swedish and foreign financial institutions, as well as from direct or indirect financing programs of exporters themselves. Deregulation and globalization of the world’s financial markets have resulted in an increasingly competitive environment for financial institutions, including SEK, for both lending opportunities and funding sources.

The following table summarizes SEK’s credits outstanding, including the S-system, and debt outstanding at December 31, 2008 and 2007:

(A)       Credits outstanding consist of loans due from customers including credits in the form of interest bearing securities. Deposits with banks and states, assets at banks that can be immediately converted into cash  and repurchase agreements are not a part of total credits, although they are included in the items Credits to Credit Institutions and Credits to the Public in the balance sheet. For a reconciliation of credits outstanding, see Note 10 to the Consolidated Financial Statements.

b.                   Lending Operations — General

The following table sets forth certain data regarding the Company’s lending operations, including the S-system, during the two-year period ending December 31, 2008:

(A)  If a credit has been accepted by the borrower it can be disbursed immediately or it can be awaiting disbursement due to a number of factors. Furthermore, a credit accepted may not finally be disbursed due to changes in the customer’s need for the funds. Currency exchange effects also affect the amount of credit commitments that will result in credits outstanding. Therefore, the volume of credits accepted does not equal the volume of disbursements of credits as presented in the Statement of Cash Flows in the Consolidated Financial Statements for a single financial year. Credits accepted but not yet disbursed are presented under the heading “Commitments” as “Committed undisbursed credits” and amounted at December 31, 2008 and 2007 to Skr 21,431.0 million and Skr 22,454.2 million, respectively. See the Balance Sheets in the Consolidated Financial Statements.

Most of the credits granted by SEK are granted to purchasers of Swedish exports. Measured by revenues, the largest markets for the export of goods from Sweden are Western Europe and North America.

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However, exports to other markets, including less developed markets, are also important. Accordingly, the need for export financing may be related to transactions involving buyers in many different countries, with varying levels of creditworthiness. Pursuant to its counterparty risk exposure policy, SEK is selective in accepting any type of risk exposure. This policy seeks to ensure that SEK is neither dependent on the creditworthiness of individual buyers of Swedish goods and services, nor on the countries in which they are domiciled, but rather on the creditworthiness of individual counterparties from which SEK accepts counterparty risk exposure.  For additional information on SEK’s approach to risk, see Note 32 to the Consolidated Financial Statements.

The following two tables show SEK’s gross and net credit exposures, respectively, to counterparties by geography and type of counterparty (taking into account applicable guarantees but not collateral) at December 31, 2008.

Gross  exposure as of December 31, 2008

Gross exposure broken down by geography and exposure classes

Net exposure as of December 31, 2008

Net exposure split by geography and exposure classes

In the table above, amounts expressing gross exposures are shown before related guarantees and credit derivatives, while net exposures are reported after taking into consideration such guarantees and credit derivatives. At the end of 2007, gross and net exposures were defined differently than at the end of 2008. Figures as per 2007 have not been reclassified in accordance with the new principles since this would be impracticable. Accordingly, no comparative figures for 2007 are presented in the tables displaying exposures.

c. SEK exclusive of the S-system

Outside of the S-system, (or in “SEK exclusive of the S-system,” as we refer to the business of SEK other than the S-system), SEK reports credits in the following categories:

1.              Medium and long-term export financing of capital goods exports.

2.              Other export-related credits, consisting of: (a) lines of credit for the refinancing of finance companies’, banks’ and exporting companies’ portfolios of revolving export receivables; (b) refinancing of export leasing agreements and short-term export finance; (c) credits for direct market investments abroad that will promote exports of Swedish goods and services; and (d) credits for research and development, to promote Swedish industry and commerce.

3.              Credits for investments in infrastructure to promote Swedish industry and commerce.

SEK’s lending includes financing in cooperation with intergovernmental organizations and foreign export credit agencies. These credits are included in the relevant category of credit above.

The Company also extends export financing by establishing credit lines or protocols, principally with countries in Eastern Europe and Asia. These credits are included in the relevant category of credit above.

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Credits outstanding (exclusive of those under the S-System) at December 31, 2008 and 2007 were distributed among SEK’s various categories of credits as follows:

Offers granted by the Company for credits that borrowers accepted (exclusive of those under the S-System) during the years ended December 31, 2008 and 2007 were distributed among SEK’s various categories of credits as follows:

Of the total volume of offers accepted during 2008, Skr 21,431.0 million (2007: Skr 22,454.2 million) has not yet been disbursed. If a credit has been accepted by the borrower it can be disbursed immediately or it can be awaiting disbursement due to a number of factors. Furthermore, a credit accepted may not finally be disbursed due to changes in the customer’s need for the funds. Currency exchange effects also affect the amount of credit commitments that will result in credits outstanding.

A long-term trend in the development of SEK’s business has been the reduction in importance of the traditional financing of durable goods for Sweden’s export industry, even though an increase in SEK’s offers accepted has been seen in 2008 due to SEK being one of the few providers of financing to the export industry in Sweden during the market turmoil. SEK’s services have therefore changed over time to meet customers’ needs. This means that a credit “granted” could be either in the form of capital goods export financing or another type of credits such as direct lending to export companies through acquisitions of securities issued under the companies’ capital markets programs, which are recorded among “Other export related credits” in the tables above.

The volume of infrastructure credits reflects the decision of the shareholder, the Swedish State, in 1996 to broaden SEK’s mandate to include infrastructure financing that directly or indirectly enhances the Swedish export industry. Therefore, municipalities and other public authorities in Sweden and elsewhere in the Nordic region have been an additional sector of business that SEK targets.

Outside the S-system, export financing is extended at prevailing market rates of interest. The Company normally makes credit offers at a quoted interest rate that is subject to change prior to acceptance of the credit offer (an “indicative credit offer”). However, credit offers can also be made at a binding interest rate (a “firm credit offer”), but such credit offers have until now rarely been made and are then only valid for short periods. When a borrower accepts an indicative credit offer, the interest rate is set and a binding credit commitment by the Company arises.

Before the Company makes any credit commitment, it ensures that the currency in which the credit is to be funded is expected to be available for the entire credit period at an interest rate (taking into account the costs of currency swaps) that, as of the day the commitment is made, results in a margin that the Company deems sufficient. Except for the portion of the Company’s credits in Swedish kronor that are financed by the Company’s shareholders’ funds and untaxed reserves, the Company borrows, on an aggregate basis, at maturities corresponding to or exceeding those of prospective credits. The Company may accordingly decide not to hedge particular credit commitments for movements in interest rate risk until some time after they are made. Interest rate risks associated with such uncovered commitments are monitored closely and may not exceed interest rate risk limits established by the Board of Directors. The Company’s policies with regard to counterparty exposures are described in Note 32 to the Consolidated Financial Statements.

The Company’s initial credit offer and subsequent credit commitment set forth the maximum principal amount of the credit, the currency in which the credit will be denominated, the repayment schedule and the disbursement schedule.

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The following table shows the currency breakdown of credit offers accepted for credits with maturities exceeding one year for each year in the two-year period ended December 31, 2008

d. S-system

The S-system was established by the Swedish State on July 1, 1978, as a State-sponsored export-financing program designed to maintain the competitive position of Swedish exporters of capital goods and services in world markets. Financing of services could, for example, relate to services provided by the exporter to a customer in relation to the export of goods. After a trial period, in April 1984 the Swedish Parliament extended the S-system indefinitely. The S-system today comprises the normal export-financing program at CIRR (Commercial Interest Reference Rate) rates and a concessionary credit program. Pursuant to arrangements established in 1978 and amended from time to time thereafter, the Company administers the S-system on behalf of the State in return for compensation based mainly on outstanding credit volumes.

Pursuant to agreements between SEK and the State, as long as any credits or borrowings remain outstanding under the S-system, the difference between interest revenues and net commission revenues related to lending and liquid assets under the S-system, on the one hand, and interest expenses related to borrowing, all other financing costs and any net foreign exchange losses incurred by SEK under the S-system, on the other hand, are reimbursed by (or paid to) the State. SEK treats the S-system as a separate operation for accounting purposes. Although the deficits (surpluses) of programs under the S-system are reimbursed by (or paid to) the State, any credit losses that may be incurred under such programs are not reimbursed by the State. Accordingly, SEK has to obtain appropriate credit support for these credits as well. All of the credits for lending under the S-system are reported on SEK’s balance sheet. SEK has consequently presented the operations of the S-system in the income statement as the amount of net commission received, rather than the gross amounts collected in accordance with the agreement with the Swedish State.

Because Sweden is a member of the Organization for Economic Cooperation and Development (the “OECD”), the S-system is designed to comply with the Arrangement on Guidelines for Officially Supported Export Credits of the OECD (the “OECD Consensus”). The OECD Consensus establishes minimum interest rates, required down payments and maximum credit periods for government-supported export credit programs. Terms vary according to the per capita income of the importing country.

SEK offers S-system financing at CIRR rates established by the OECD in accordance with the OECD Consensus. The CIRR-rates for new credits are subject to periodic review and adjustment by the OECD. The OECD Consensus stipulates that credit offers can be valid for a period of not more than four months, during which period the commercial contract must be signed, if at all. Thereafter the CIRR rate can be locked in for a maximum period of six months in order for the credit agreement to be finalized. No commitment fee is charged for Swedish CIRR credits. The arranging bank receives compensation of 0.25 percent per annum, based on the outstanding credit amount, to cover its costs for arranging and managing the credit. The arranging bank can either be SEK itself, or a commercial bank in Sweden.

The OECD Consensus also provides eligibility standards for concessionary credits. In principle, such credits are not permitted to be extended to countries whose per capita GNP for at least two consecutive years has exceeded the World Bank threshold for 17-year loans. Concessionary credits to other countries are not permitted to be extended to finance public or private projects that normally would be commercially viable if financed on market or OECD Consensus terms.

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SEK participates with government agencies in a State-sponsored export-financing program (the “Concessionary Credit Program”) for exports to certain developing countries, presently incorporating a foreign aid element of at least 35 percent. The foreign aid element is granted in the form of lower rates of interest and/or deferred repayment schedules, and the State reimburses SEK in the S-system for the costs incurred as a result of SEK’s participation in such program. In general, credits under the program are made with State guarantees administered by the Exportkreditnämnden (EKN) (Sweden’s Export Credits Guarantee Board). All such credits granted by SEK must also undergo SEK’s customary approval process.

The following table sets forth the volumes of offers accepted, not disbursed credits at year end, new credits disbursed and credits outstanding at year end under the various programs in the S-system for each year in the two-year period ended December 31, 2008. The moderate increase in volumes of offers accepted under the CIRR-credits program was related to a increase in demand from exporters for such credits due to the financial crisis having made it more advantageous to borrow at the CIRR rate compared with market rates. The decrease in volumes of offers accepted under the Concessionary Credit Program in 2008 was primarily related to lower activity within this market segment.

e. Credit Support for Outstanding Credits

The Company’s policies with regard to counterparty exposures are described in detail in Note 32 to the Consolidated Financial Statements.

The following table shows the credit support by category of counterparty for the Company’s outstanding credits for the two-year period ending December 31, 2008. Although most credits are supported by elements from more than one category, resulting in more than one party being responsible for the same payments to SEK, this table reflects only the counterparty (either borrower or guarantor) that SEK believes to be the stronger credit.

Consolidated Group, including the S-system

See “—  Lending Operations — General” for information on the geographical distribution of borrowers.

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f.            Organizational Structure

SEK has the following business segments: granting of credits; advisory services; and capital market products.  SEK organizes its activities in these segments into three main business areas: Corporate & Structured Finance, Advisory Services, and SEK Securities. Furthermore, SEK’s Capital Markets group, a group outside of the three main business areas, is responsible for funding, liquidity and related matters.

Corporate & Structured Finance. The Corporate & Structured Finance group is responsible for all activities in general lending, export credits, project finance, leasing and other structured finance projects, as well as origination and advisory services. The Corporate business line has overall responsibility for SEK’s relationships with its customers.  The Structured Finance business line is responsible for structured finance solutions, project financing and leasing products. As a complement to SEK’s lending activity, the Advisory Services business line offers independent consulting services to both the private and public sectors based on SEK’s experience in various areas, especially export credits and project finance, risk management and capital markets. The Emerging Markets business line  handles lending and borrowing in emerging markets currencies.

In November 2008, the Swedish government proposed that SEK’s capacity to assist the Swedish export industry with long-term funding be improved. As part of this, AB Svensk Exportkredit received all of the shares in Venantius AB (“Venantius”) from the State through a shareholder contribution on December 18, 2008. SEK obtained control over the operations of Venantius upon the date of acquisition. Venantius was established in 1995, according to a parliamentary decision, in order to take over loan facilities with potentially high credit risk from SBAB. The loan portfolio in 1995 comprised Skr 33 billion in housing loans. At the time of acquisition, on December 18, 2008, the equity in Venantius amounted to Skr 2.4 billion, credits to the public totaled approximately Skr 0.5 billion and liquid funds amounted to approximately Skr 1.9 billion. Venantius role within the business area Corporate & Structured Finance is to manage its remaining loan portfolio with the goal of achieving the best possible long-term economic outcome for SEK.

SEK Securities. AB SEK Securities is a wholly-owned subsidiary with a license from the Swedish Financial Supervisory Authority to conduct a securities business. AB SEK Securities sells investors capital markets products issued by third-party issuers, principally in the primary market via private placements.

Capital Markets. The Capital Markets group comprises two sub-functions: Funding, and Liquidity Management. Funding is responsible for managing SEK’s borrowing program and Liquidity Management is responsible for the investment of SEK’s liquidity portfolio. See also Item 5, “Operating and Financial Review and Prospects — Liquidity, Capital Resources and Funding — Liquidity”.

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Segment revenues other than granting of credits represent together less than 4 percent of the total revenues, and therefore segment revenues are not separately disclosed.

In addition, SEK maintains a risk control unit, an internal audit function and a compliance function, all of which operate independently of the business areas. See also Note 32 to the Consolidated Financial Statements.

g.            Swedish Government Supervision

The Company operates as a credit market institution within the meaning of the Swedish Banking and Financing Business Act (the “Act”). As such, it is subject to supervision and regulation by the Swedish Financial Supervisory Authority (the “Supervisory Authority”), which licenses and monitors the activities of credit market companies to ensure their compliance with the Act and regulations there under and their corporate charters.

Among other things, the Supervisory Authority requires SEK to submit reports on a three-month, six-month and twelve-month basis and may conduct periodic inspections. The Supervisory Authority also may (but currently does not) appoint an external auditor to participate with SEK’s independent auditors in examining the Company’s financial statements and the management of the Company.

As a credit market institution, SEK is also subject to regulation of its capital adequacy and limits on credit to a single customer pursuant to the Capital Adequacy and Large Exposures (Credit Institutions and Securities Companies) Act, as amended.

As of January 1, 2007, the revised capital adequacy rules of the Basel Committee, on Banking Regulation and Supervisory Practices at the Bank for International Settlements (the “Basel Committee”) referred to as Basel II, became applicable to credit institutions in Sweden and the European Union, including SEK.

In July 2005, SEK submitted an application to the Supervisory Authority related to the use of the Internal Ratings Based Approach when calculating risk-weighted claims under Basel II. In March 2007, the Supervisory Authority finally determined that SEK can use an Internal Ratings Based Approach when calculating risk-weighted claims under Basel II based on legislation adopted in Sweden at the beginning of 2007. The quantitative analysis regarding Pillar I (methods for calculating minimum capital requirements for certain risks) was implemented in 2005. During 2006 the required capital base, depending on the Company’s risk profile with regard to all relevant risks, was established (Pillar II).  Reporting under the new rules was done for the first time as of March 31, 2007. See also Note 31 to the Consolidated Financial Statements for further details on the Capital Adequacy of SEK and Note 32 to the Consolidated Financial Statements for a discussion regarding Basel II and its effects.

The capital adequacy requirements under Swedish law comply with international guidelines, including the recommendations issued by the Basel Committee. The principal measure of capital adequacy is a capital to risk weighted asset ratio, which compares the capital base to the total of  risk weighted assets and off-balance sheet items. The capital base is divided into two components, one of them being “core” or “Tier-1” capital, which includes equity capital and, with certain limitations, non-cumulative preferred shares and similar instruments. Non-cumulative preferred shares and similar instruments may not up to December 2008, be included in Tier 1 capital to the extent they exceed 15 percent of the Tier-1-capital other than non-cumulative preferred shares and similar instruments. In December 2008, the Swedish Financial Supervisory Authority promulgated new regulations concerning the calculation of primary capital with the effect that credit institutions and securities companies are now permitted to maintain a larger proportion of “Tier-1-eligible capital” in their Tier-1-capital. This capital is allowed to be added to Tier-1-capital up to 30 percent of the total amount of Tier-1-capital, in comparison to the previously allowed 15 percent. The amended regulation impacted SEK’s Tier-1-ratio positively by 1.3 percentage points as of December 31, 2008. The other component in the capital base is “supplementary” or “Tier 2” capital, which includes non-cumulative preferred shares and similar instruments not included in core capital, plus subordinated obligations with an original term of at least five years (with a deduction of 20 percent for each of the last five years prior to maturity). Assets are assigned a weighting based on relative credit risk depending on the debtor or the type of collateral, if any, securing the assets. Under the new regime, Basel II, a greater emphasis is placed on ratings and all of SEK’s

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counterparties are internally rated by SEK in order to meet the capital requirements. The minimum capital ratio requirement under pillar I is 8 percent, and not more than 50 percent of an institution’s regulatory capital may comprise supplementary capital. SEK’s policy is to maintain a strong capital base, well in excess of the regulatory minimum. At December 31, 2008, SEK’s total regulatory capital ratio was 15.5 percent (2007: 8.9 percent) and its Tier 1 ratio was 14.8 percent (2007: 6.5 percent). The regulatory capital ratio was negatively affected by certain transitional rules imposed by the Swedish Financial Supervisory Authority which will remain in place until the financial year 2010. Were one to exclude the effect of these transitional rules, SEK’s total regulatory capital ratio at December 31, 2008, would have been 21.4 percent (2007: 17.1 percent) and its Tier 1 ratio  20.4 percent (2007: 12.4 percent). See also Note 31 to the Consolidated Financial Statements.

Under the regulatory rules for large exposures, a “large exposure” is defined as a (risk-weighted) exposure to a single counterparty (or counterparty group) that exceeds 10 percent of the institution’s regulatory total capital base. These rules state that no individual large exposure may exceed 25 percent of the regulatory total capital base of the institution, and that the aggregate amount of large exposures may not exceed 800 percent of the institution’s regulatory total capital base. The aggregate amount of SEK’s large exposures on December 31, 2008, was  81 percent (2007: 325 percent) of SEK’s regulatory total capital base, and consisted of risk-weighted exposures to 7 (2007: 22) different counterparties (or counterparty groups). These counterparties (or counterparty groups) were all rated by at least one of the major rating agencies, Moody’s and Standard & Poor’s, with ratings of not lower than investment grade.

The Company’s subsidiary, AB SEK Securities, is licensed to conduct a securities business and as such is regulated by the Swedish Financial Supervisory Authority under the Securities Operations Act.

h.            Property, Plants and Equipment

The Company owns, through its wholly-owned subsidiary AB Sektionen, an office building in the City of Stockholm. The major part of the building is used by the Company as its headquarters. The available office space in the building is approximately 2,200 square meters. SEK may not utilize the building for other purposes than as an office, and the building is not secured by a mortgage.

ITEM 4A      UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

a.                Overview

Substantially all of SEK’s revenues and net income derive from the net interest revenues earned on its credits and interest-bearing securities. Funding for these assets comes from equity, including the capital contributed to the Company by the State and from debt securities issued in the international capital markets. Accordingly, key determinants of SEK’s profits from year to year are the spread, or difference, between the rate of interest earned on its debt-financed assets and the cost of that debt, the rate of interest earned on the investment of its equity and the outstanding volumes of credits and interest-bearing securities in the balance sheet, as well as the relative proportions of its assets funded by debt and equity. SEK raises debt with terms that may be fixed, floating, or linked to various indexes. SEK’s strategy is to economically hedge these terms to floating IBOR rates to match its debt financed assets. The quality of SEK’s balance sheet, stable credit rating and public policy role within Sweden with a close connection to the Swedish state has enabled SEK to achieve funding at a level which is competitive in the market.

In recent years SEK’s profit under IFRS (for the financial years 2008, 2007 and 2006) has declined. The decline reflects several factors, including (1) the marking to market of financial assets, the value of which has declined due to recent economic turmoil; and (2) provisions for probable credit losses and impairment of financial assets.  Especially during 2008, SEK was materially affected by these factors. On the other hand, during 2008 SEK was positively affected by its relative strength on the funding markets and was able to lower its borrowing costs significantly, partly because SEK continued to have access to funding in U.S. dollars. Furthermore, SEK has realized gains related to the repurchasing of own debt and by avoiding negative

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unrealized losses through the reclassification of certain assets which the Company has the intention and ability to hold to maturity.

One of the additional factors affecting net profit positively has been higher volumes of debt-financed interest-bearing assets in the balance sheet.  On the other hand, increased costs related to new and pending regulations, particularly Basel II, IFRS, and the Sarbanes-Oxley Act of 2002 (SOX) have affected net profit negatively in recent years.

The Company has continued to rebuild equity through retained earnings and a restrictive dividend policy. In December 2008, SEK’s equity was significantly increased through a capital contribution of Skr 3 billion in new equity from the Swedish State and the related transfer of the shares of the State-owned company Venantius AB to SEK. Venantius’ equity as of the date of acquisition amounted to approximately Skr 2.4 billion. In recent years, SEK has also expanded into business areas that may produce non-interest revenue, although commission income has not thus far made a material contribution to SEK’s revenues and profits.

SEK has identified a material weakness in internal control over financial reporting as of December 31, 2008.  For additional information on the material weakness, see Item 15T herein.

SEK has restated its consolidated IFRS financial statements as of December 31, 2007 and for the years ended December 31, 2007 and 2006, respectively, in order to correct certain technical errors in the marking to market of a number of derivative positions, assets and liabilities required to be reported at fair value. The changes have the overall effect of reducing previously reported net income for 2006 and 2007, while increasing previously reported shareholder’s equity for those years. The changes in profit and loss primarily appear in net result of financial transactions, and primarily reflect unrealized value changes due mainly to technical difficulties in correctly valuing hedged transactions where the hedged instrument has been replaced with a new instrument, and also due to corrections of credit spreads where the unrealized value change related to such credit spreads is presented through the profit and loss.   A number of these changes also affect the balance sheet, which has also been restated to correct technical errors in the classification of certain items (which errors had no impact on total equity).  For additional information on the restatement, see Note 34 to the Consolidated Financial Statements.

b.               Critical Accounting Policies and Estimates

When applying the accounting policies management makes judgments and estimates that have significant effect on the amounts recognized in the financial statements. The estimates are based on past experience and assumptions that the Company believes are fair and reasonable. These estimates and the judgment behind them affect the reported amounts of assets, liabilities and off-balance sheet items, as well as income and expenses in the financial statements presented. Actual outcomes can later, to some extent, differ from the estimates and the assumptions made. Please see below for information on items where critical estimates have been made. The Company believes the judgments made related to the following critical accounting policies to be of most significance:

· The functional currency of the Parent Company

· Classifications of securities as quoted on an active market

· The selection of the appropriate valuation techniques when prices from active markets are not available for derivatives and other financial instruments carried at fair value

· SEK is regarded as an agent with respect to the S-system

· Assessment at acquisition of Venantius.

Furthermore, the Company has identified the following key sources of estimation uncertainty when applying IFRS:

· Provisions for probable credit losses

· Estimates of fair values when quoted market prices are not available

· Valuation of derivatives without observable market prices.

The functional currency

SEK has determined that the Swedish krona (Skr) is its functional currency under IFRS. SEK is economically hedged regarding foreign currency exchange revaluation effects related to revaluation of balance sheet components. A major part of its assets, liabilities and related derivatives is denominated in foreign currency.

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Under IFRS both the assets and the liabilities are translated at closing exchange rates and the differences between historical book value and current value are reflected as foreign exchange effects in revenues and expenses, where they largely offset each other. This reflects the economic substance of SEK’s policy of holding assets financed by liabilities denominated in, or hedged into, the same currency.

Classifications of securities as quoted on an active market

When classifying securities as loans and receivables, the Company is making judgments on whether these securities are quoted on an active market based on a number of pre-established factors. SEK has established an operational definition of when a transaction should be regarded as quoted on an active market. An instrument is regarded as quoted on an active market by SEK if there are sufficient numbers of parties offering bid and/or ask prices. All other transactions are regarded as not quoted on an active market. In the case of uncertainty, additional qualitative criteria are taken into consideration in accordance with a predefined process.

If a larger number of securities were deemed to be quoted on an active market, these securities would be classified as assets available for sale and the after-tax changes in fair value for these securities would affect equity. It is, however, essentially impossible to predict the quantitative impact of any such changes because of the lack of homogeneity of our portfolio of non-quoted securities; the impact would very much depend on which types of securities were so classified, and any process we developed for identifying such types would be inherently speculative.

The selection of the appropriate valuation techniques when prices from active markets are not available for derivatives and other financial instruments carried at fair value

When reporting the amounts of its assets and derivatives, and its revenues and expenses, assumptions and estimates must be made in assessing the fair value of financial instruments and derivatives, especially where unquoted or illiquid securities or other debt instruments are involved. SEK makes judgments regarding what the most appropriate valuation technique is for the different financial instruments held by the Group. If the conditions underlying these assumptions and estimates were to change, the amounts reported could be different. When financial instruments are carried at fair value, fair value is calculated with the use of market quotations, pricing models, valuations established by external parties and discounted cash flows. A major part of SEK’s financial instruments are not publicly traded, and quoted market prices are not readily available. Different pricing models or assumptions could produce different valuation results. Furthermore, the estimated fair value of a financial instrument may, under certain market conditions, differ significantly from the amount that could be realized if the security were sold immediately. Derivative instruments are carried at fair value, and fair value is calculated based upon internally established valuations, external valuation models, quotations furnished by external parties or dealers in such instruments or market quotations. However, different pricing models or assumptions could produce different valuation results. If the assumptions underlying those internal models were to change it could result in a material change in the fair value of those assets or liabilities.

If, for example, the assumption regarding the yield of interest-bearing financial assets or liabilities with a fixed interest rate were changed so as to be 0.10 percent higher or lower than the yield actually used in the calculation, this would affect operating profit for the fiscal year ending December 31, 2008 by approximately Skr 10-30 million and total equity, at such date, by approximately Skr 10-50 million.

Please see more information regarding valuation techniques in Note 11 to the Consolidated Financial Statements.

SEK is regarded as an agent with respect to the S-system

SEK has assessed the S-system to be an assignment where SEK acts as an agent on behalf of the Swedish state rather than being the principal in the individual transactions. This assessment has been made based on a number of indicators such as: (i) SEK does not in substance, even though in it may in form, have the risk and reward of ownership; (ii) SEK does not have discretion in establishing prices; and (iii) SEK receives compensation in the form of a fixed commission. SEK has consequently presented the operations of the S-system in the income statement as the amount of net commission received, rather than the gross

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amounts collected in accordance with the agreement with the Swedish state. If SEK would be regarded as a principal with respect to the S-system, all revenues and expenses in the S-system would be revenues and expenses of SEK. However, the net effect on SEK’s operating profit would be unchanged.

Assessments at acquisition of Venantius

At the time of the acquisition of Venantius, it was determined that common control existed as the owner, the Swedish state, was the sole shareholder of both the acquired and the acquiring company. Furthermore, it was assessed that the purchase method should be used in accounting for the transaction and that the acquisition cost should be determined based upon a valuation of the shares in the acquired company.

Provisions for probable credit losses

Provisions for probable credit losses are made if and when SEK determines that the obligor under a credit or another asset held, as well as existing guarantees and collaterals, will probably fail to cover SEK’s full claim. If the judgment underlying this determination were to change it could result in a material change in provisions for probable credit losses.

Credit or impairment losses are recognized as the difference between the carrying value of a loan and the discounted value of our best estimate of future cash repayments. These estimates takes into account a number of factors related to the obligor. The actual amounts of future cash flows and the dates they are received may differ from these estimates and consequently actual losses incurred may differ from those recognized in the financial statements. If, for example, the actual amount of total future cash flow were 10 percent higher or lower than the estimate, this would affect operating profit for the financial year ending December 31, 2008 by Skr 50-60 million and total equity by Skr 30-40 million at that date.

Estimates of fair value when quoted market prices are not available

Classifying a transaction at fair value through profit and loss requires valuing the instrument at its full fair value, including the impact of the credit spread. When quoted market prices are not available for such instruments certain assumptions must be made about the credit spread included in these valuations. If these assumptions were to change it could result in a material change in the fair value of these instruments.

If the assumption with relation to the valuation of assets classified at fair value through profit and loss were changed such that the average credit spread applied to such assets were 0.10 percent higher or lower than the spread actually used in the calculation, this would affect operating profit for the fiscal year ending December 31, 2008 by approximately Skr 40-60 million and total equity, at such date, by approximately Skr 30-50 million.

If the assumption with relation to the valuation of liabilities classified at fair value through profit and loss were changed such that the average credit spread applied to such liabilities were 0.10 percent higher or lower than the spread actually used in the calculation, this would affect operating profit for the fiscal year ending December 31, 2008 by approximately Skr 400-700 million and total equity, at such date, by approximately Skr 300-500 million. These sensitivity analyses show possible effects on fair value from changes in assumptions about credit spreads. However, they can also be viewed as an estimate of potential risk for changed fair values related to a change in market pricing of credit risk for the issuer of the asset or liability.

SEK issues debt instruments in many financial markets. A large portion of these are hybrid instruments with embedded derivates. SEK’s policy is to hedge the risks in these instruments using swaps with corresponding structures in order to obtain effective economic hedges. These hybrid debt instruments are classified as financial liabilities measured at fair value. As there are no market quotes for this group of transactions, valuation models, valuations established by external parties or quotations furnished by dealers in such instruments are used to calculate fair value. The models used are the same for a hybrid liability and the structured swap hedging it, except for adjustments due to counterparty or SEK´s own credit risk. Thus, with the exception of effects from changes in counterparty and SEK’s own credit risk valuation, fair value changes in a hybrid liability are always matched by corresponding changes in the fair value of the swap that is hedging that liability. Although SEK’s credit rating has not changed during the year, the development on financial markets has to some extent affected the level at which SEK’s debt is issued. This change, which is different in

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different markets, has been included in the calculation of fair value for these liabilities. The models used include both directly and observable and implied market parameters.

Please see more information regarding valuation techniques in Note 11 to the Consolidated Financial Statements.

Valuation of derivatives without observable market prices

A large part of SEK’s portfolio of senior securities and related derivatives are in the form of structured products where the presence of certain embedded derivatives (even though not bifurcated) sometimes require sophisticated models for valuing these instruments at fair value. If these assumptions were to change it could result in a material change in the fair value of these instruments, though, since SEK only enters into market matched hedge relationships (economic or accounting hedge) a potential material effect on profit and loss or equity would only result if there were changes in the credit spreads.

SEK uses swap agreements (primarily) to hedge risk exposure in financial assets and liabilities. SEK enters into the swap agreements only under ISDA master agreements and all swap contracts are with financial institutions as counterparties. Counterparty risks are managed by using a Credit Support Annex or other agreement where the credit exposure is mitigated on at least a monthly basis. Swaps are measured at fair value by using the market quoted rates where available. If market quotes are not available valuation models are used. For counterparties where SEK has a positive swap portfolio value, SEK uses a model to adjust the net exposure fair value for changes in the counterparty’s credit quality. The models used include both directly observable and non-observable market parameters.

Please see more information regarding valuation techniques in Note 11 to the Consolidated Financial Statements.

c.            Recent Accounting Pronouncements Issued

IASB permits early adoption of amendments to IAS 27” Consolidated and Separate Financial Statements”, IFRS 3R” Business Combinations”, IAS 1” Presentation of Financial Statements”, IAS 32” Financial Instruments: Presentation” IAS 39” Financial Instruments: Recognition and Measurement” and the new standard IFRS 8, Operating Segments. These amendments are applicable from January 1, 2009, with the exception of IFRS 3, parts of IAS 27 and IAS 39 that are applicable from financial years commencing after July 1, 2009. It is voluntary to apply the amendments for the financial year 2008, and SEK has chosen not to implement in advance any of these amendments in 2008. The Company is currently evaluating whether the adoption of the amendments will have a material impact on its financial reporting, though it has already determined that certain transactions affecting equity will need to be presented in a separate total comprehensive income statement.

d.            Assets and Business Volume

Total Assets

SEK’s total assets totaled Skr 370.0 billion (2007: Skr 297.2 billion) at year-end, an increase of approximately 24 percent.  The main components of the net change in total assets were a Skr 49.4 billion increase in total credits and a Skr 1.9 billion increase in total  liquidity (see Note 10 to the Consolidated Financial Statements).  Foreign currency exchange effects positively affected the book values of these portfolios by approximately Skr 17.5 billion and Skr 20.1 billion, respectively. Total credits outstanding represented Skr 158.7 billion (2007: Skr 109.3 billion) of total assets, while total liquidity represented Skr 161.8 billion (2007: Skr 159.9 billion). The increase in the volume of total credits  outstanding at year-end was primarily attributable to a higher than usual rate of acceptance of the offers outstanding in the last few months of the year, reflecting the current turmoil in the financial markets, which led customers to secure whatever financing was available. Furthermore, currency exchange effects related to the weakening of the Swedish krona positively affected total credits outstanding.

In addition to the revenue -generating assets, the balance sheet at year-end also included Skr 38.9 billion (2007: Skr 20.3 billion) representing derivatives, Skr 6.1 billion (2007: Skr 5.3 billion) representing accrued

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and prepaid items, Skr 0.1 billion (2007: Skr 0.1 billion) representing non-financial assets, and Skr 4.3 billion (2007: Skr 2.3 billion) representing other assets. The month-end average volume of total assets during the year was approximately Skr 270 billion (2007: Skr 234 billion).

The aggregate amount of outstanding offers for new credits totaled Skr 27.4 billion at year-end (2007: Skr 45.6 billion), a decrease of approximately 40 percent. The decrease in the volume of outstanding offers at year-end, was primarily attributable to a higher than usual rate of acceptance of the offers outstanding in the last few months of the year, reflecting the current turmoil in the financial markets, which led customers to secure whatever financing was available.

Business Volume

Sweden depends heavily on its exports and exports accounts more than half of Sweden’s GNP. In addition, a small number of very large corporations accounts for a large portion of Swedish export revenues. These corporations have traditionally been dependent on large multinational banks for their long-term financing needs. The liquidity crisis in the financial markets has resulted in most of the large international banks have reducing their activities in the Scandinavian market, and made it increasingly difficult for Swedish export companies to find long-term financing during 2008.  As a result, their interest in the kind of financing solutions offered by SEK has increased significantly.

During the year, SEK successfully expanded its ability to offer its customers financing in local currency. In December, SEK became one of only six foreign institutions to be granted a license to issue bonds in Thai baht. In addition, in 2008 SEK expanded its offering to also include Brazilian real, Kazakh tenge and Romanian leu.

In December, the Swedish government significantly strengthened SEK’s lending capacity through a capital contribution of Skr 3 billion in new equity and a transfer of the shares of the state-owned company Venantius AB. Venantius’ equity amounted to approximately Skr 2.4 billion, as of December 18, 2008. In addition, at the beginning of 2009, SEK was provided a borrowing facility of up to Skr 100 billion by the Swedish State.  SEK has not yet made use of this facility.  The Swedish parliament has also given a mandate to the government to provide SEK with the possibility to purchase State guarantees on commercial terms for its new borrowing (including issuance of debt securities) up to Skr 450 billion.

The rating level established after the Swedish State assumed 100% control of the Company in 2003 has remained unchanged since then. SEK’s long-term debt rating as of May 2009 remains AA+ from Standard & Poor’s and Aa1 from Moody’s.

Due to its relatively high liquidity, SEK has been one of only a few parties able to provide long-term financing to Swedish exporters, in this difficult market situation. As detailed in the table below, the volume of financing solutions provided to new customers in 2008 amounted to Skr 64.9 billion, an approximate 14 percent increase compared with the previous year and the highest volume ever for SEK.

New Customer Financial Transactions:

Increases in credits for the Swedish export industry and lending to the financial sector were the main drivers behind these high volumes. Credits granted to the export industry increased to Skr 39.5 billion during 2008, compared with Skr 27.6 billion during 2007 and Skr 24.6 billion during 2006. The increase to the financial sector contributed indirectly to an increase in lending to small and medium-sized companies through

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Nordic financial institutions obtaining funding from SEK. New lending to the corporate sector during the fourth quarter amounted to Skr 19.3 billion, of which Skr 12.4 billion was lent in December.

During 2008, Skr 0.9 billion (2007: Skr 1.3 billion) of long-term credits were granted under the S-system (see Note 24 to the Consolidated Financial Statements).

The total amount of credits outstanding and credits committed though not yet disbursed increased during the year to Skr 180.1 billion at year-end (2007: Skr 131.7 billion), of which Skr 158.7 billion (2007: Skr 109.3 billion) represented credits outstanding, an increase of approximately 45 percent. The increase was related mainly to increased new business volumes. Of the aggregate amount of Skr 180.1 billion (2007: Skr 131.7 billion) of credits outstanding and credits committed, Skr 21.6 billion (2007: Skr 21.4 billion) was related to the S-system, of which Skr 10.1 billion (2007: Skr 8.8 billion) represented credits outstanding. The aggregate amount of outstanding offers for new credits at year-end decreased to Skr 27.4 billion (2007: Skr 45.6 billion).

Over the year SEK carried out 705 funding transactions, with its aggregate borrowing for the year amounting to Skr 86.2 billion (2007: Skr 108.0 billion). This represents a decrease of Skr 21.8 billion compared with the previous year, but was nonetheless a strong performance in view of the turmoil and liquidity crisis in financial markets during the year. The maturities for SEK’s new borrowing have been slightly shorter than before.

The global market situation has resulted in SEK focusing primarily on structured capital market borrowing during the year. The Japanese and U.S. retail bond markets accounted for the bulk of SEK’s new borrowing. SEK has consequently been able to fund itself almost entirely without using the Swedish markets. SEK has also been highly active in repurchasing its own bonds during the year.

e.            Counterparty Risk Exposures.

Management believes that the quality of SEK’s assets remains high. The table below shows a break-down, by counterparty category, of SEK’s total counterparty risk exposure related to each of the types of instrument indicated as of December 31, 2008 and 2007, respectively.  Although the total amount of our counterparty risk exposure increased by approximately 15 percent from Skr 298.4 billion to Skr 342.5 billion (reflecting increased business volumes), the relative weight of each of the categories remained rather stable, with decreases in the relative weight of our exposure to asset-backed securities, financial institutions and regional governments, while the relative weight of government export credit agencies, central governments and corporates increased. The amounts of gross counterparty exposures, before taking into consideration credit guarantees and other risk-mitigating instruments, is shown in Note 32 to the Consolidated Financial Statements.

Consolidated Group