DANMARKS NATIONALBANK DANISH GOVERNMENT DEBT MANAGEMENT. 5 July 2016

Transcription

1 DANMARKS NATIONALBANK DANISH GOVERNMENT DEBT MANAGEMENT 5 July 2016

2 2 Kingdom of Denmark: AAA, Stable Outlook Low government debt Current account surplus and net external assets Reform-oriented policies Competitive economy and flexible labour market Strong and transparent institutional framework Denmark benefits from high institutional effectiveness, mature political and institutional frameworks that promote fiscal discipline, and a modest government debt burden. [S&P, March 2016] Denmark has a high value-added and wealthy economy, supported by strong institutions with a track record of solid macroeconomic, fiscal and financial stability management. [Fitch Ratings, February 2016] The country s robust public finance indicators are also supportive of the rating and compare favorably with many AAA-peers. [Moody s, November 2015]

3 3 Outline Economic Outlook Government Finances and Debt Borrowing Strategy for 2016

4 4 Denmark is a Creditor Nation Consistent current account surpluses since 1999 and net external assets since 2009 Well diversified exports across industries and countries Main sectors include pharmaceuticals and other manufactured goods including design and high-end products Improvement in wage competitiveness Net external assets and current account Per cent of GDP Per cent of GDP Net external assets Current account balance (right axis) Source: Statistics Denmark. Exports by region, 2015 Source: Statistics Denmark.

5 5 Exchange Rate Peg since 1982 Fixed exchange regime has been a cornerstone in economic policy since 1982 The fixed exchange rate is the only monetary policy aim for the Danish central bank Euro referendums in 1992 and 2000 Central rate = DKK per 100 EUR with a fluctuation band of ±2.25% Exchange rate Kroner per euro 9,0 8,5 8,0 7,5 7,0 6,5 6, Market rate Central rate Fluctuation limits (+/ per cent)

6 6 Normalisation of FX Reserves and Government Cash Buffer Following large inflows in 2015 the size of FX reserves are now back to more normal levels Limited impact from Brexit Fx reserves Per cent of GDP Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 The cash buffer is expected to normalise in 2016 Kr bn. (equivalent to 4-5 per cent of GDP) is a sufficient liquidity reserve Large cash buffer

7 7 Outline Economic Outlook Government Finances and Debt Borrowing Strategy for 2016

8 8 Strong Public Finances and Low Government Debt Central-government budget surplus in 2014 and 2015 Strong government budget framework Limits for structural deficits and expenditure ceilings Effective sanctions against budget overruns Low central-government debt Central-government net cash balance Per cent of GDP Central-government debt Declining debt since 2012 Duration on total portfolio (ALM approach) is around 12 years Among the lowest EMU-debt in Europe

9 Low EMU-debt Denmark Sweden Finland Holland Germany Austria UK Ireland France Spain Belgium Portugal Italy Greece Gross general government debt end-2015, per cent of GDP

10 10 Outline Economic Outlook Government Finances and Debt Borrowing strategy for 2016

11 11 The Currency Split Danish Funding Rules Domestic funding rule Issuance in DKK to cover the deficit and redemptions of domestic debt T-bills and bullet loans Method: Auctions supplemented with tap Foreign funding rule Issuance in foreign currency to maintain an adequate foreign-exchange reserve Dollar and euro loans Method: Syndication

12 Strategy for 2016 Supporting a Liquid Market 12 Bond issuance target: DKK 65 bn. (EUR 9 bn.) Well-known and broad list of bonds: 2-, 5-, 10-year nominal bonds Domestic redemption profile DKK billion year bond 10-year inflation-linked bond Issuance is focused on building up the 2-year and 10-year nominal bond Bonds T-bills Issuance in 2016 DKK billion Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2-year 5-year 10-year 30-year 10 year index Issuance target

13 13 Domestic Bond and T-bill Issuance Funding through auctions supplemented by tap-selling directly in secondary markets 3 month auction calendar: Domestic bonds (twice a month - 1 st and 3 rd Wednesday) T-bills (twice a month) Switches (twice a month) Monthly buy-back auctions Active DMO role in the secondary markets Tap-selling and buying Primary dealers are listed in the appendix Bond calendar Date Auction Type* 12 May Switch operation 18 May Regular 15 May Switch operation 01 June Regular 09 June Switch operation 15 June Regular 22 June Switch operation * Papers are announced Thursday before the auction after consulting PDs T-bill calendar Date Auction Type 11 May T-bill 30 May T-bill 08 June T-bill 29 June T-bill 13 July T-bill

14 Solid Bid-to-Cover at Auctions January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June DKK billion Bids Sales

15 15 Ownership of Domestic Bonds Large and developed investor base Access to foreign investors ensures a broad investor base Total non-resident bond ownership share is 40 per cent Ownership, per segment DKK Billion Per cent (end-april) 0 0 < 1 year 2-year 5-year 10-year 30-year 10-year Total linker Non-residents Insurance and pension Banks Other Source: Danmarks Nationalbank, end-april Foreign ownership of domestic bonds Source: Danmarks Nationalbank, end-april 2016.

16 16 10-year Yield Spreads to Germany Note: Par yields Source: Nordea Analytics

17 Further Information Primary Dealers 17 Government Bonds: Regional: Danske Bank Nordea Nykredit Bank Skandinaviske Enskilda Banken (SEB) Spar Nord Bank Sydbank International: Barclays Bank BNP Paribas HSBC JP Morgan Morgan Stanley T-bills: Danske Bank Nordea Nykredit Bank SEB Sydbank Commercial Paper: ECP Bank of America/Merill Lynch Barclays Credit Suisse Citibank Deutsche Bank ING UBS USCP Bank of America/Merill Lynch Barclays JP Morgan

18 Further Information Terms and Settlement 18 Domestic Bonds: Listing: OMX/Nasdaq Copenhagen Governed by Danish Law Clearing: VP Securities, Euroclear and Clearstream Primary Dealers and clearing houses provide custody services Standard settlement: t+2 days Main trading platforms: Inter-dealer: MTS Denmark, Eurex Bonds, ICAP/BrokerTec and Nasdaq OMX Other: Bloomberg, Bondvision and Tradeweb Foreign bonds (EMTN): Programme amount: Up to USD 25bn 144a/RegS language included Listing: Luxembourg Stock Exchange Governed by UK law Clearing: Euroclear, Clearstream and DTC Forms of Instruments: Bearer or registered

19 Further Information Contact Information and links 19 Contact information: Debt Management Office nationalbanken.dk Head of DMO: Lars Mayland Nielsen // Senior Adviser: Thorsten M. Larsen // Danmarks Nationalbank Havnegade 5, 1093 Copenhagen K, Denmark Useful links: Ministry of Finance: Ministry of Economic Affairs and the Interior: Statistics Denmark: Economic Council: MTS Denmark: NASDAQ OMX:

20 Annex 20

21 21 Denmark in Brief Part of Scandinavia in Northern Europe Population: 5.6 million Capital: Copenhagen (1.2 million) Land area: 42,895 km 2 Currency: Danish kroner pegged to the euro Government: Constitutional monarchy Member of the European Union since 1973

22 22 Government Debt Management Danish DMO Located in Danmarks Nationalbank Borrows on behalf of Ministry of Finance Government debt policy Borrowing strategy Risk management Overall management of government funds, re-lending and government guarantees, etc. Investor relations