Germany s Development Agency for Agribusiness

Transcription

1 Germany s Development Agency for Agribusiness

2 Table of Contents 1. Promotional Mandate and Agricultural Sector 3 2. Promotional Activities for Agribusiness 6 3. Added Value for Investors Funding Strategy Contacts Additional Information 27 Numbers in this presentation are unconsolidated and in accordance with German GAAP numbers are un-audited.

3 Government-Backed Promotional Mandate 3 /32 Supporting agribusiness and rural areas Germany s promotional bank for the agricultural sector and rural areas, established by federal law in 1949 Promotion of agriculture, forestry, viticulture and horticulture, fishery, renewable energies as well as municipal rural infrastructure Promotion of up-stream and downstream industries in relation to the agricultural sector New promotional lending roughly EUR billion per year, total assets 2013: EUR 78.3 billion Providing efficient access to loans at reduced interest rates Promotional Mandate and Agricultural Sector

4 A Time-Honored Business Model 4 /32 Special Promotional Loans: no end-borrower risk through on-lending Rentenbank raises funds in capital markets Local banks grant loans to the endborrower. These loans are refinanced by Rentenbank. Having a collateralized claim against the local bank, Rentenbank does not bear any endborrower risk Local banks assess and bear the credit risk for an acceptable margin but do not bear any liquidity risk Rentenbank provides long-term credit for agriculture and rural areas. The application process ensures that promotional rates reach the end-borrower End- Borrower Capital Markets Local Bank Promotional Mandate and Agricultural Sector

5 The Importance of Agriculture in Germany 5 /32 Capital-intensive industry, internationally competitive Nearly half of Germany s landmass is arable (18.6 million hectares) Significant increase in productivity: Total value of production in 2013: EUR 54.5 billion One farmer today can produce food for 129 people, whereas a farmer in 1949 could only produce food for 10 people High capital intensity: EUR of capital is invested per work space High share of long-term loans (above 80 per cent longer than five years) Germany is the second largest producer of agricultural goods in the EU. It is the world s third largest exporter of agricultural goods Promotional Mandate and Agricultural Sector

6 The Two Pillars of Promotional Lending 6 /32 Stable overall business volume Special Promotional Loans Granted exclusively in Germany Borrower: local bank of the end-borrower Use of funds: predefined promotional purposes, passed through local banks to the end-borrower Setting of Interest Rates: at promotional rates (reduced through Rentenbank s earnings) Standard Promotional Loans and Securitised Promotional Business Granted in Germany, other EU Countries, Norway and Switzerland Special Promotional Loans Standard Promotional Loans & Securitised Promotional Business Borrower: approx. 90 per cent banks Use of funds: general funding purposes, borrowers have lending relationships with agriculture or rural areas New Promotional Lending: 2013: EUR 11.6 billion 2012: EUR 10.4 billion Setting of Interest Rates: at market rates Promotional Activities for Agribusiness

7 Special Promotional Loans 7 /32 Variety of promotional loans Projects in agriculture and rural areas are promoted at favourable rates with five promotional loan programmes Agriculture Promotion of investments and liquidity support in times of crisis Aquaculture and Fishery Maximum promotional loan amount: usually EUR 10 million per endborrower per year More than loans per annum Agribusiness Renewable Energies Rural Development Promotional Activities for Agribusiness

8 Special Promotional Loans 8 /32 Illustration of investments in agriculture and rural areas Photovoltaic installations, biogas plants and wind parks New buildings, especially stables e.g. cattle sheds and pigsties Purchases of land and machinery Animal and environmental protection e.g. measures to introduce higher animal welfare standards in the animal husbandry or to reduce emissions Promotional Activities for Agribusiness

9 Standard Promotional Loans & Securitised Promotional Business 9 /32 Liquidity reserve and expansion of revenue base Emphasis on credit quality of the borrower (rated AAA to A) and repo eligibility with the ECB Format: senior unsecured, covered or government guaranteed, not subordinated No investments in structured credits Focus on Germany and core EU countries Promotional Activities for Agribusiness

10 Rentenbank Bonds - for Security and Liquidity 10 /32 Guarantee and Institutional Liability from the Federal Republic of Germany Comprehensive Supervision by BaFin / ECB Rentenbank Bonds Liquid Assets & Repo Eligibility Added Value for Investors AAA Ratings

11 Guarantee of the Federal Republic of Germany 11 /32 Legal framework Guarantee of the Federal Republic came into effect on January 1 st, 2014 Guarantee is explicit, direct and unconditional Not limited with respect to volume and duration Governing Law of Landwirtschaftliche Rentenbank: Section 1a Guarantee of the Federal Republic The Federal Republic guarantees all obligations of the Bank in respect of loans extended to and debt securities issued by the Bank, fixed forward transactions or options entered into by the Bank and other credits extended to the Bank as well as credits extended to third parties inasmuch as they are expressly guaranteed by the Bank. Added Value for Investors

12 Government Supervision and Ratings 12 /32 Strong oversight, top marks Legal supervision by the Federal Ministry of Food and Agriculture, making decisions in concert with the Federal Ministry of Finance Subject to banking supervision by German regulator BaFin and the ECB AAA Exempt from corporate income tax and trade tax Triple-A ratings from Moody s, S&P and Fitch for all issues (senior unsecured and subordinated liabilities) Added Value for Investors

13 Risk Weighting and Eligibility as Liquid Asset 13 /32 Privileged status based on federal guarantee Claims on Rentenbank are zero per cent risk-weighted under the creditrisk standardised approach Based on Regulation (EU) No 475/2013 (CRR) and the EBA Report on uniform definitions of liquid assets, we expect that our bonds will be recognised as extremely high quality liquid assets (ehqla) Details are to be specified by the EU- Commission Added Value for Investors

14 Solid Financial Profile 14 /32 Rentenbank s key figures Focus is not on profitability maximisation. However, a decent operating result enables us to offer promotional loans at more attractive rates and to strengthen our capital base Low Cost-Income-Ratio although under pressure from regulatory costs underpins the ongoing commitment to tight cost control Capital ratios are far above the current and foreseeable minimum regulatory requirements Core capital grows exclusively from retained earnings 1 Not comparable to the previous year s figure without reconciliation, due to a change in presentation in fiscal year 2012, relating to the provisions for the interest rate subsidy of special promotional loans. Added Value for Investors

15 Performance and Stability of Rentenbank Bonds 15 /32 Strong primary placement supports secondary market performance Stable and limited funding requirements The majority of our bonds issuance is fully subscribed or oversubscribed EUR Swap Spread High quality of investors, no fast money accounts Repo eligible in various currencies with a number of central banks (see annex) Several banks support our bonds and provide liquidity by showing attractive bid quotes RENTEN /30/2021 USD Swap Spread RENTEN /17/18 Added Value for Investors

16 Sound Funding Strategy 16 /32 Broad range of funding products and currencies Regular issuance of benchmark bonds in core currencies USD and EUR Positioning as strategic issuer Global Bonds Utilising a broad range of products and currencies Structured & Plain Vanilla Euro Medium Term Note (EMTN) Avoiding dependence on specific markets and investor groups Funding Products and Currencies Continuous dialogue with investors and banks Broadening the funding base, increasing liquidity Uridashi-, Kangaroo & Kauri-Bonds Euro- Commercial Paper (ECP) Domestic Funding Funding Strategy

17 Sound Funding Strategy 17 /32 Medium and long-term funding Annual funding volume (> 2 years): approx. EUR 10 billion, funding raised YTD: EUR 8.2 billion Issuance in USD Globals and Euro benchmarks amount to approx. 35 per cent of the annual funding volume % % Funding Volume (EUR billion) % % % 10.0 AUD ( Kangaroo ) bonds make an important contribution to a diversified investor base Liquid bonds of the EMTN programme in EUR, USD and other currencies as well as private placements Preferred maturities between 3 and 10 years, Average duration YTD: 6.7 years % 50% 17% 36% % 28% 30% 17% 26% 17% 18% 9% 8% 4% years 3-5 years 5-7 years > 7 years volume YTD volume expected Funding Strategy

18 Funding Programme Breakdown by Currency 18 /32 EUR, USD and AUD prevail the funding mix Currency diversification: broad investor base, permanent market access, and cost efficient funding Benchmark currencies EUR and USD prevail in general, currency mix fluctuates with maturity preferences 4 th largest issuer in the Kangaroo market based on outstanding volume AUD 16% NZD GBP7% 4% USD 34% NOK other 1% 3% Currency 2014 YTD EUR 8.2 bn EUR 35% Elimination of currency risks through cross-currency swaps, management on the basis of a floating-rate Euro balance sheet Funding Strategy

19 Funding Programme Breakdown by Investor Type 19 /32 Diversified investor base Central Banks and Official Institutions play a major role, especially in benchmark transactions Due to a need for liquid assets, Bank Treasuries form our largest investor group Demand from Asset Managers for secure assets remains stable Ins./Corp./ Pen. 10% Asset Managers 13% Central Banks/ OIs 28% Investor Type 2014 YTD EUR 8.2 bn Banks 49% Funding Strategy

20 Funding Programme Investor Breakdown by Region 20 /32 International placement capabilities Europe and Asia are regions with historically high investor demand Global distribution pattern reflects our excellent positioning Solid domestic investor base, on which we can rely in times of financial market stress Americas 3% Germany 15% AUS/NZ 10% UK 21% MEA 5% Region 2014 YTD EUR 8.2 bn other Europe 24% Asia 22% Funding Strategy

21 Funding Programme Breakdown by Issue Type 21 /32 Public issues are the major source of funds Public bonds are issued in various currencies; those are liquid, but typically smaller than benchmark transactions Liquidity plays a key role for international investors Benchmark 24% PP 4% Issue Type 2014 YTD EUR 8.2 bn Public 72% Plain Vanilla private placements have lost ground as a result of increased regulatory requirements and liquidity rules Funding Strategy

22 SRI Bonds 22 /32 Promoting sustainable projects Issuance of the first Renewable Energy Bond (SRI Bond) with a volume of EUR 50 million in August Overall issued volume: 65 million The funds will be used for the promotional programme Renewable Energies (photovoltaic installations, wind and water turbines, biogas plants, biomass heating plants, wind parks) SRI bond strategy: Tailor-made small to medium sized issues exclusively designed for SRI investors Pricing in line with secondary market curve No benchmark-sized SRI bonds Funding Strategy

23 Short-Term Funding EMTNs up to 2 Years 23 /32 Complementary to the money market business Additional to funding in capital market maturities cost comparison with ECP programme Maturities or non-call periods of up to 2 years All currencies of the EMTN programme Preference for plain vanilla Callable structures possible Few other structures available Funding Strategy

24 Short-Term Funding - Euro Commercial Paper 24 /32 Frequent issuer in the ECP market Programme volume: EUR 20 billion Maturities: 1 day days 68.2 ECP Issues (EUR billion) Rating: P1/ A1+/ F1+ (Moody s/s&p/fitch) Dealer group: Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, Royal Bank of Scotland, UBS Contact: Ralf Häuser, Director / Head of Money Markets, Phone: , haeuser@rentenbank.de Terms via Reuters page: Rentenbank USD EUR GBP CAD AUD SEK CHF NZD NOK JPY average outstanding volume Funding Strategy

25 Rentenbank A Solid Investment 25 /32 Responsible and Responsive Funding Strategy Strong and Solid Credit Scarcity Value Stable Funding Programme Funding Strategy

26 Rentenbank Contacts 26 /32 Landwirtschaftliche Rentenbank, Hochstrasse 2, Frankfurt am Main Internet: Phone: , Fax: Bloomberg Ticker: RENTEN, Reuters: RENTENBANK Dr. Horst Reinhardt, Speaker of the Board of Managing Directors, Ext. -277, reinhardt@rentenbank.de Treasury Division: Stefan Goebel, Managing Director / Head of Treasury Ext. -269, goebel@rentenbank.de, Fax Treasury: Norbert Schlereth, Managing Director / Head of Treasury Ext. -281, schlereth@rentenbank.de, Fax Treasury: Funding Department: Leopold Olma, Director / Head of Funding Ext. -225, olma@rentenbank.de Holger Koncewicz, Associate Director Ext. -205, koncewicz@rentenbank.de Martina Burger, Senior Specialist Ext. -212, burger@rentenbank.de Eugenia Kaplun Ext. -470, kaplun@rentenbank.de Contacts

27 Index Representation (I) 27 /32 Rentenbank bonds in USD Indices Index Sub-Index Sub-Sub-Index Barclays U.S. Aggregate Bond Government Related Agencies, Gov. Index Guaranteed BofA Merrill Lynch US Broad Quasi & Foreign Market Index Government Citigroup USD World BIG Index Government / Government Sponsored Citigroup US BIG Index Government / Government Sponsored Gov. Guaranteed Additional Information

28 Index Representation (II) 28 /32 Rentenbank bonds in Euro Indices Index Sub-Index Sub-Sub-Index Barclays Euro Aggregate Bond Government Related Agencies, Gov. Index Guaranteed BofA Merrill Lynch Euro Broad Market Index Markit iboxx EUR Benchmark Indices Quasi & Foreign Government Sub Sovereign J.P. Morgan Euro Credit Index Public Sector Citigroup Euro BIG Index Government / Government Sponsored Gov. Guaranteed Agencies Sovereign Guaranteed Additional Information

29 Repo Eligibility 29 /32 Rentenbank bonds are privileged in a number of markets with respect to repo eligibility Institution / Category Product Currency ECB / Liquidity Category II, EMTNs, stand-alone bonds EUR Issuer Group 8 Federal Reserve Bank (FED) EMTNs, Globals AUD, CAD, CHF, DKK, EUR, GBP, JPY, SEK, USD Swiss National Bank (SNB) EMTNs CHF, EUR, USD Reserve Bank of Australia (RBA) Reserve Bank of New Zealand (RBNZ) Eurex-Repo / GC Pooling ECB Basket Australian Dollar Domestic MTNs (Kangaroo Bonds) Bonds settling via Austraclear NZ (Kauri Bonds) Bonds with RLTN (remaining lifetime) above 1 year AUD NZD EUR, USD Additional Information

30 Liquid Bonds (I) 30 /32 Currency Format Launch Maturity Size Coupon mm/dd/yyyy mm/dd/yyyy (million) (%) USD EMTN 01/15/ /02/ (incl. increases) USD Global 01/13/ /15/ USD Global 11/16/ /16/ USD EMTN 04/29/ /15/ USD Global 01/12/ /15/ USD Global 05/31/ /15/ USD Global 11/08/ /08/ USD Global 02/01/ /01/ USD Global 09/12/ /12/ USD Global 09/13/ /13/ USD Global 04/04/ /04/ USD Global 09/15/ /17/ USD Global 02/12/ /15/ USD Global 10/23/ /23/ USD EMTN 03/24/ /24/ CHF EMTN 06/30/ /30/ CHF EMTN 07/07/ /07/ CHF EMTN 04/16/ /16/ Additional Information

31 Liquid Bonds (II) 31 /32 Currency Format Launch Maturity Size Coupon mm/dd/yyyy mm/dd/yyyy (million) (%) EUR EMTN 06/15/ /15/ EUR EMTN 02/11/ /11/ EUR EMTN 08/27/ /05/ EUR EMTN 11/27/ /27/ EUR EMTN 03/02/ /02/ (incl. increases) EUR EMTN 02/20/ /20/ (incl. increases) EUR EMTN 06/21/ /01/ (incl. increases) EUR EMTN 05/11/ /11/ EUR EMTN 11/19/ /19/ EUR EMTN 01/16/ /15/ (incl. increases) FRN EUR EMTN 08/30/ /30/ EUR EMTN 05/13/ /20/ AUD A$MTN 01/21/ /21/ (incl. increases) AUD A$MTN 01/27/ /27/ (incl. increases) FRN AUD A$MTN 01/27/ /27/ (incl. increases) AUD A$MTN 04/12/ /12/ (incl. increases) AUD A$MTN 04/13/ /13/ (incl. increases) AUD A$MTN 01/14/ /17/ AUD A$MTN 03/09/ /09/ (incl. increases) AUD A$MTN 03/29/ /29/ (incl. increases) AUD A$MTN 01/24/ /24/ (incl. increases) AUD A$MTN 09/25/ /08/ (incl. increases) AUD A$MTN 02/07/ /07/ (incl. Increases) Additional Information

32 Disclaimer This document contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of Rentenbank s management and currently available information. Such statements include, in particular, statements about our plans, strategies and prospects. Words such as expects, anticipates, intends, plans, believes, seeks, estimates, variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Except as required by law, Rentenbank does not have any intention or obligation to update publicly any forward-looking statements after they are made, whether as a result of new information, future events or otherwise.