AFRICAN DEVELOPMENT BANK

Transcription

1 ISSUER PROFILES AFRICAN DEVELOPMENT BANK OUTLOOK SUPRANATIONAL AAA/Aaa/AAA/AAA (JCRA) US$1.8BN/UP TO US$9.8BN About AfDB African Development Bank (AfDB) is the premier development finance institution in Africa, with a mandate to combat poverty. AfDB enjoys triple-a ratings which reflect the bank s strong membership support, prudent policies, healthy capital adequacy, franchise value and strong financial condition. AfDB s shareholders are all the 53 countries in Africa (with a 6 shareholding) and 24 other countries including the G7 countries (with a 28% shareholding) in the Americas, Europe and Asia. Turkey and Luxembourg are in the process of becoming shareholders. AfDB s capital structure has two components: paid-in and callable. Callable capital is that portion of the subscribed capital stock subject to call only as and when required by the bank to meet its obligations on borrowing of funds for inclusion in its ordinary capital resources or guarantees chargeable to such resources. No call has ever been made on the callable capital of the bank. A total of 7.6 billion Units of Account (UA) (US$11.7 billion) of callable capital is from countries rated A- or better, of which UA5.3 billion (US$8.2 billion) is from AAA-rated countries. (1UA = 1SDR and was equal to USD at December ) The bank s risk management policies, guidelines and practices are designed to reduce exposure to interest rate, currency, liquidity, counterparty, legal and other operational risks while maximising AfDB s capacity to assume credit risks to public and private sector clients, within its approved risk limits. For example, the debt ratio caps the bank s total outstanding debt to 100 per cent of the usable capital (defined as the sum of paid-in capital, reserves, and callable capital of countries rated A- and above). Furthermore, AfDB s liquidity policy ensures that the level of liquidity can cover its projected net cashflow needs for a one-year rolling period. Funding programme AfDB has a borrowing programme target for 2009 of up to 6.4 billion UA in the capital markets, equivalent to about US$9.8 billion. The increase in the funding programme is in line with increased operations in Africa under the bank s medium-term strategy and the countercyclical role being played by the bank in combating the impact of the financial crisis on Africa. The funding strategy aims at providing cost-effective funding to African countries and nurturing a diversified investor base while bringing visibility to the continent and its success stories. By mid-august 2009 AfDB had raised over 50 per cent of the maximum amount in seven currencies through transactions in all the major segments of the market, including global and domestic bond markets, Uridashis, private placements and African currencies. The final level of execution of the programme will be guided by the pace of disbursements on lending operations. Since 2002 AfDB has annually executed a global bond issue/domestic market issue as part of a conscious strategy to increase investor understanding of its credit story. The domestic bond markets are a strategic priority for the bank. Since 2006 AfDB has issued in Australia, New Zealand, Canada, South Africa and Switzerland. In February 2006 AfDB executed its inaugural A$300 million Kangaroo bond issue which matures in February Since then, the bank has organised investor meetings in 2007 and AfDB s Kangaroo bonds are repo-eligible with the Reserve Bank of Australia. The bank has also issued Uridashis in AUD. AfDB debuted in the Kauri bond market in February 2008 with a NZ$200 million February 2013 bond and continues to monitor possibilities for future issuance. The bank s Kauri bonds are repo-eligible with the Reserve Bank of New Zealand. Hassatou N Sele, Head of Funding h.nsele@afdb.org investors-resources/ 2 4 K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

2 ASIAN DEVELOPMENT BANK OUTLOOK SUPRANATIONAL AAA/Aaa/AAA US$9.4BN/US$10-11BN (MINIMUM SIZE) About ADB Asian Development Bank (ADB) was established in 1966 and is owned by its 67 member countries. The bank s main goal is to reduce poverty in Asia and the Pacific region through inclusive economic growth, environmentally sustainable growth and regional integration. ADB pursues its goal primarily by providing various forms of financial assistance to its developing member countries. ADB was founded mainly to act as a financial intermediary to transfer resources from global capital markets to developing member countries for economic development. Its ability to intermediate funds from global capital markets for lending to its developing members is an important element in achieving its development missions. In 2008 ADB approved 98 loans for US$10.5 billion (96 loans for US$10.1 billion in 2007). Of ADB s 67 members, 48 are from the Asia Pacific region. Forty-one are borrowing members. ADB s five largest shareholders are Japan and the US (each with 15.6% of total shares), People s Republic of China (6.4%), India (6.3%) and Australia (5.8%). Twenty-three ADB members are also members of the Organisation for Economic Cooperation and Development (OECD), and they hold 64.5% of the bank s total subscribed capital. ADB s members have subscribed about US$55 billion of capital, of which about US$4 billion was paid-in and the remainder callable as of December Paid-in capital constitutes the equity portion of capital available for ADB s OCR lending operations. This is supplemented by retained earnings and leveraged by the proceeds of ADB s borrowings. ADB s capital quality remains excellent, with triple-a rated member countries holding 57% of total subscribed capital and double-a rated member countries holding 4% of total subscribed capital. Callable capital is available to protect ADB s creditors as needed for debt service payments and thus provides the ultimate backing for ADB s borrowings and guarantees. It cannot be called to make loans. ADB has never made a call on its callable capital. Since 1966 ADB has raised its capital base five times. In April 2009 ADB s Board of Governors agreed to triple the bank s capital base to US$165 billion from about US$55 billion, giving it much-needed resources to respond to the global economic crisis and to the longer-term development needs of Asia and the Pacific region. (borrowing and lending limitation) ADB s borrowing policy limits the bank s gross outstanding borrowings to no more than the sum of callable capital of non-borrowing members, paid-in capital and reserves (including surplus). ADB s lending policy limits the total amount of disbursed loans, approved equity investments, and the maximum amount that could be demanded from the bank under its guarantee portfolio to the total amount of ADB s unimpaired subscribed capital, reserves and surplus. ADB is a leading triple-a borrower in international and domestic capital markets. The bank diversifies its funding sources across markets, instruments, and maturities. ADB has so far issued bonds in 25 markets. The bank offers a variety of debt products to investors including large, liquid benchmark bonds, plain vanilla bonds, emerging market currency bonds, and a broad range of investor-specific structured notes, tailored to investor requirements. In 2008 ADB raised US$9.4 billion in medium- and longterm borrowings and its target funding volume for 2009 is about US$11 billion. ADB was the first supranational to issue Kangaroo bonds, bringing a A$1 billion five-year transaction in September The bank followed its debut deal with trades in 1999, 2001 and every year from 2006 to In total, by the beginning of September 2009 ADB had issued A$4.575 billion in the Kangaroo market, with just over A$3 billion outstanding in five maturities (2011, and 2016). ADB has not yet issued Kauri bonds but continues to monitor the market with interest. capitalmarkets@adb.org 2 5

3 ISSUER PROFILES BANK NEDERLANDSE GEMEENTEN OUTLOOK AGENCY AAA/Aaa/AAA BN/ 13-15BN 1BN Risk management at BNG is determined by the bank s objective to offer its shareholders a reasonable return, subject to the key condition that its excellent creditworthiness remains intact. This is reflected in, among other things, the imposition of strict and solid limits on credit, market, liquidity and operational risks. About BNG Bank Nederlandse Gemeenten (BNG) is a Dutch bank of and for local authorities and public sector institutions. All the bank s shareholders are public authorities. Since 1921 the agency has been 5 owned by the Dutch central government, while the remaining 5 is owned by municipalities, provinces and a waterboard in the Netherlands. The bank s mission is to help minimise the cost to the pubic of the provision of social services. BNG s share ownership is restricted by its Articles of Association to the State of the Netherlands, provinces, municipalities, water boards and other public bodies. Half of the bank s share capital is held by the State of the Netherlands and the other half by more than 95% of all the municipal authorities, 11 of the 12 provincial authorities and a waterboard. Changes in the present stakeholder structure are not expected. The central government s 5 stake has been held since The strong commitment of the central government to its holding was evidenced by its participation in the most recent issue of shares in 1990 so as to maintain its 5 stake. There have only been two share transfers among lower-tier governmental entities in BNG s history. There has never been a call on the capital of the bank. Although BNG s obligations do not carry a direct state guarantee, the bank has substantial support from the 5 ownership by the Dutch government. BNG s high-grade asset quality reflects the fact that close to 9 of customer loans are public sector credits. In addition, the bank s credit exposure is extremely low. The majority of the loans and the securities portfolio consists of receivables from or guaranteed by public authorities with a zero per cent risk weighting. For 2009 BNG expects to raise in the region of billion equivalent in the international capital markets. This compares with the 13.1 billion equivalent raised by the agency in The bank strives to issue benchmark bonds with a minimum size of one billion denominated in euros and US dollars each year so as to maintain yield curves in both currencies. The rest of the funds is raised in the major markets yen, sterling, Swiss franc, Australian dollar (Kangaroo), New Zealand dollar (Kauri) and Canadian dollar (Maple) as well as through smaller retail-type transactions, private placements and structured deals. All issues are swapped back into euros. After the sovereign, BNG is one of the largest issuers in the Netherlands. BNG has issued in AUD in the Kangaroo, Uridashi and euro- Aussie markets. By the beginning of September 2009 the agency had issued a total of A$2.050 billion in the Kangaroo bond market, with A$950 million outstanding in two maturities. BNG s Kangaroo bonds are repo-eligible with the Reserve Bank of Australia. BNG debuted in the Kauri bond market in 2007, becoming the first triple-a rated agency issuer to enter the market. By September 2009 the agency had issued a total of NZ$525 million in the Kauri market, with NZ$400 million outstanding in two maturities. BNG s Kauri bonds are repo-eligible with the Reserve Bank of New Zealand. Capital Markets Department capital.markets@bng.nl K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

4 CADES OUTLOOK AGENCY AAA/Aaa/AAA 9BN/ 33BN 3BN as on capital gains from property (6%), investments (5%), and the sale of precious metals and gaming (2%). CADES can only invest in bonds issued by the French government or that have an explicit guarantee from the French government. It has no exposure to currency risk. About CADES CADES (Caisse d Amortissement de la Dette Sociale or Social Security Debt Repayment Fund) was established by government order N dated January This legislation was amended by Act n of August , as part of the ongoing reform of France s social insurance system. CADES s existence is therefore inseparable from efforts to balance the accounts of the French social security system. CADES s mission is to finance and extinguish the debt accumulated by the basic national social security scheme from 1994 to The total debt includes a deficit of 34.2 billion for 1994 to 1998, an estimated 35 billion for the years from 2002 to 2004, and 15 billion for 2005 and Moreover, every year until 2005 CADES is obliged to make a 3 billion payment to the state budget to compensate for the billion social security liability taken on by the state in Although CADES was created with a limited life span in 1996, the law of 2004 abolished the deadline of It also guaranteed CADES would receive additional resources should new debt be transferred onto its balance sheet to maintain an estimated target for a steady completion of its mission (estimated in 2021). Following the transfer of 26.9 billion of new debt in Q an additional tax claim was attributed to CADES (0.2% of General Social Contribution). CADES is wholly owned by the French State. CADES debt financing relies on its borrowing power on financial markets and on the use of a variety of financial instruments. The repayment of these issues is mainly guaranteed by the proceeds of a mandatory levy on citizens income. This levy, known as the Contribution to the Repayment of Social Security Debt (CRDS), was introduced in 1996 to provide CADES with revenue to amortise its assumed debt. This 0.5% tax is levied on all earned and replacement income (87%) as well The financing strategy implemented by CADES since its creation has helped the organisation to become a top-grade international issuer. The broadening of the scope of its remit has further enhanced its status, allowing CADES to continue the consolidation of its debt, 80.8% of which was financed by medium- and long-term programmes by July The extension of CADES mission produced a peak in its funding requirement in when its raised 21 billion in long-term debt. After this, in 2007 and 2008 the needs for funds came from the redemption of existing bonds and shortterm paper ( 10 billion per year). The transfer of an additional 26.9 billion in 2009 has increased the CADES funding progamme to 33 billion. By July CADES had issued billion in medium- and long-term bonds denominated in euro (both new tranches and taps on existing bonds), 4.19 billion equivalent in USD new benchmarks, 1.48 billion equivalent in public bonds in other currencies including CHF, JPY, GBP and AUD; and 1.27 billion in private placements and MTNs. Outstanding debt is mostly denominated in euro (67%) and USD (31%). AUD represents one third of the remaining 2%. CADES has raised A$2 billion in the Kangaroo market in three maturities. While it was first regarded as an arbitrage market, this is now considered by CADES to be a strategic market as a way of diversifying its investor base and providing new sources of funding. CADES has also been active in the AUD MTN and Uridashi markets. CADES has not yet issued in the Kauri bond market. Documentation is up to date, so the agency is waiting for a cost-efficient opportunity to enter this market. FOR FURTHER INFORMATION PLEASE CONTECT: Philippe Noël, Head of Capital Markets philippe.noel@cades.fr 2 7

5 ISSUER PROFILES COUNCIL OF EUROPE DEVELOPMENT BANK OUTLOOK SUPRANATIONAL AAA/Aaa/AAA 3.3BN/ 2.5BN risk management and control policy, even though as a supranational financial organisation it is not compulsory. In accordance with these regulations, CEB ensures that no counterparty exceeds the limit of 25% of its own funds. With regard to the liquidity policy, the bank s liquidity must not be less than 5 of net requirements for the next three years. About CEB Council of Europe Development Bank (CEB) is a multilateral development bank with a social vocation. Established on April to bring solutions to the problems of refugees, its scope of action has progressively widened to other sectors of action directly contributing to strengthening social cohesion in Europe. CEB represents a major instrument of the policy of solidarity in Europe: it uses its resources for the financing of social projects in order to help its 40 member states achieve sustainable and equitable growth. CEB has 40 member states across Western and Eastern Europe. The countries with the biggest shareholding are Germany, France and Italy all founding members of the bank and each with a 16.64% share. The total amount of subscribed capital stands at 3.3 billion, out of which 2.9 billion is callable. Member countries are Albania, Belgium, Bosnia and Herzegovina, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Holy See, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Serbia, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, the former Yugoslav Republic of Macedonia, and Turkey. To ensure constant access to the resources needed to fund its activities, CEB issues benchmark borrowings in major currencies targeting a broad range of investors. Smaller transactions, to answer specific investor demand in terms of currencies and structures, complement the funding activity. In 2008 CEB raised 3.3 billion and the funding requirement for 2009 is around 2.5 billion. By July CEB had raised 1.4 billion in six currencies (USD, GBP, CHF, AUD, NZD and HKD). Since its inaugural Kangaroo deal in September 2004 CEB had issued A$2.3 billion in the Kangaroo market in four maturities by the beginning of September 2009, with A$1.8 billion outstanding. CEB s most recent Kangaroo deal was brought in May The bank has also issued in the euro-aussie market. CEB debuted in the Kauri bond market in January 2008 and by the beginning of September 2009 had issued a total of NZ$675 million in three maturities November 2011, October 2014 and April CEB intends to monitor the market closely so as to be a regular issuer in NZD. Given the long-term character of its social vocation loan activities, the bank is mainly interested in the longer part of the curve five-year maturities and longer. CEB has preferred creditor status among borrowing members. 57.3% of callable capital is rated AAA while 23.4% is AA-rated. Over 9 of callable capital is investment grade. CEB established, well before the global financial crisis, an integrated risk management process quite independent from operational activities. CEB is using the Basle Committee Recommendations and the European Union Directives in its Arturo Seco-Presencio Head of Funding arturo.seco-presencio@coebank.org Magnus Sandin Senior Funding Officer magnus.sandin@coebank.org 2 8 K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

6 EUROPEAN INVESTMENT BANK SUPRANATIONAL AAA/Aaa/AAA 60BN/ 80BN US$3-5BN 3-5BN maximum loans outstanding equivalent to two and half times its capital. Also, EIB s Statutes do not permit the taking of foreign exchange views and EIB is very conservative in its interest rate risk policy, with an almost matched book. The loan book results demonstrate a conservative loan policy, with an overwhelming focus on well-secured lending. Non-performing loans were as of end of June About EIB European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union (EU). The task of the bank is to contribute towards the integration, balanced development and economic and social cohesion of the EU member states. EIB raises substantial volumes of funds on the capital markets which it lends on favourable terms to projects furthering EU policy objectives. EIB continuously adapts its activity to developments in EU policies, and periodically revises a tightly-focused range of lending priorities. EIB is owned by all the 27 member states of the EU. Since shareholdings are based mainly on GDP, the 15 countries who were EU members before 2004 account for 94.8% of shareholding while the 12 newcomers since 2004 account for 5.2%. However, the four largest countries have equal shareholdings of 16.2% each, 64.7% in total. Three of these are triple-a rated (Germany, France and the UK) and one is rated double-a (Italy). The EIB shareholder structure by rating is as follows: AAA: 72.1%, AA: 21.8%, A: 4.6% and BBB: 1.5% (all based on best rating). EIB is very strongly capitalised, being solely and entirely owned by the 27 members of the EU. As of April EIB s total subscribed capital was billion. This new level of subscribed capital is more than double the bank s risk-weighted assets of 103 billion. As at end Q1 2009, paid-in capital and reserves, or own funds, amounted to 36 billion. This is all topquality Tier 1 capital, and makes the capital adequacy (BIS II ratio) exceptionally high at 35%. Since more than 9 of lending is to projects in EU countries, the shareholders are beneficiaries of EIB s lending activities, which is reflected in their strong support. To help minimise shareholders and creditors risk, EIB has set leveraging guidelines. Under its Statute, the bank may have The cornerstone of EIB s funding strategy continues to be the combination of benchmark issuance in the three core currencies, offering exceptionally comprehensive and carefully maintained yield curves. In 2008 EIB raised the equivalent of 60 billion, with AUD the fourth-largest currency of issuance. The funding programme for 2009 is 80 billion and again AUD stands in fourth place year to date. By September EIB had raised almost 71 billion in 17 currencies. EIB has issued AUD in the global, Uridashi, euro-aussie and Kangaroo markets, but focuses nowadays on the most liquid and public Kangaroos. EIB remains the largest overall issuer in the Kangaroo bond market, with A$12.1 billion issued in total across 10 maturities and A$11.5 billion outstanding in the market across nine maturities by September As with the core currencies, EIB remains committed to maintaining and further developing a liquid Kangaroo market and by September had already issued A$2.9 billion in this calendar year, including opening two new maturities, 2014 and This makes EIB the largest Kangaroo issuer in the year to date. EIB is also the only Kangaroo issuer to have a A$2.5 billion line outstanding, its 6% 2013 bond. In 2006 EIB issued the first Kangaroo inflation-linked bond, a A$250 million line due 2020, which was increased in December 2007 to total A$500 million. The NZD was EIB s seventh-largest currency in 2008 via a range of products including a Kiwi Uridashi, NZD eurobonds, and a Kauri bond, totalling NZ$1.5 billion. EIB also has a NZD global line outstanding which was issued in 2007 with a maturity of In the Kauri bond market, EIB has NZ$900 million outstanding in two maturities. This year, EIB has seen less demand for NZD. Eila Kreivi, Head of Funding for the Americas and Asia Pacific kreivi@eib.org 2 9

7 ISSUER PROFILES EUROFIMA OUTLOOK SUPRANATIONAL AAA/Aaa 2 CHF4BN/CHF2BN (BUDGET) About EUROFIMA European Company for the Financing of Railroad Rolling Stock (EUROFIMA) is a supranational organisation located in Basel, Switzerland. It was established in 1956 based on an international treaty signed by 25 European sovereign States so far. EUROFIMA fulfils a non-profit maximising mission to support the development of rail transportation in Europe. It supports its shareholder railways as well as other railway bodies in renewing and modernising their equipment. EUROFIMA is owned by national railway companies in 25 European countries. Railways based in countries with a Aaa sovereign rating hold more than 67% of shares, while railways based in countries with an investment-grade rating hold 97%. 67.2% of callable capital is rated triple-a, while 25.5% is double-a rated. In total 97.36% of callable capital is investment grade. EUROFIMA s credit support is particularly strong as it relies on several elements: Railway equipment collateral (EUROFIMA holds title to or security interest on the equipment until full repayment of the financing); Extensive reserves; Government guarantee (each member state guarantees the obligations of its railway under the equipment financing contracts, and guarantees the obligations of its railway as EUROFIMA s shareholder); Joint shareholders guarantee (each shareholder guarantees the fulfillment of all EUROFIMA s equipment financing contracts in proportion to its holding in EUROFIMA s share capital). EUROFIMA s risk management activities seek to appropriately identify, measure, monitor and report all types of financial risks inherent in the company s operations. A comprehensive set of internal guidelines and policies, as well as systems and procedures, are in place to control and report on the main financial risks. EUROFIMA s funding strategy is built on three pillars. First, US dollar benchmark issues. There are currently six US$1 billion benchmark bonds outstanding with tenors from 2010 to Secondly, the supranational also focuses on providing continuous and consistent offerings in Swiss francs and Australian dollars. In its own domestic market EUROFIMA offers one of the most complete yield curves up to a maturity of In the Kangaroo market it is one of the major borrowers with a complete curve out to The final pillar is currency diversification: beyond its strategic focus on the above three markets, EUROFIMA offers bonds in a wide range of currencies. At December the supranational had outstanding bonds in 14 different currencies. In 2008 EUROFIMA raised the equivalent of CHF4 billion, with the Australian dollar being the second-largest currency of issuance during the year. The funding programme for 2009 is about CHF2 billion. By July EUROFIMA had raised CHF700 million. EUROFIMA is one of the largest Kangaroo issuers and it is best known as an issuer of longer-dated paper, with 2018, 2020 and 2022 lines. The supranational debuted in the Kangaroo market in 2001 and by the beginning of September 2009 had A$6.035 billion outstanding across eight maturities. Besides the Kangaroo market, EUROFIMA has also issued Australian dollars in Eurobond and Uridashi format. In New Zealand dollars EUROFIMA is present in the Kauri, Eurobond and Uridashi markets. In 2008 the supranational launched its inaugural Kauri and Uridashi bonds. The NZ$275 million May 2013 Kauri is EUROFIMA s only outstanding bond in this market, but confirms EUROFIMA s commitment to diversification of funding currencies and investor base. *SEE Q&A ON P19 FOR MORE DETAIL ON EUROFIMA Martin Fleischer, Head of Capital Markets martin.fleischer@eurofima.org K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

8 INSTITUTO DE CRÉDITO OFICIAL OUTLOOK AGENCY AA+/Aaa/AAA 14BN/ 16BN US$1-2BN 1-2BN About ICO Instituto de Crédito Oficial (ICO) is a state-owned corporate entity attached to the Ministry of Economy and Finance of Spain and acts as the Kingdom of Spain s financial agency. ICO s objectives are to support and promote those economic activities which will contribute to economic growth and a more equitable distribution of the nation s wealth and, especially, those which due to their social, cultural, innovative or ecological significance are particularly worth developing. In doing so, ICO must strictly adhere to the principles of financial equilibrium and adequacy of resources. As the State s financial agency, ICO follows the government s specific instructions in the provision of financing to victims of serious economic crises, natural disasters and other similar circumstances. through different public transactions in a diverse range of markets (EUR, USD, GBP, JPY, NOK and CHF) as well as through several investor tailor-made private placements. As far as currencies are concerned, the breakdown is as follows: 66% EUR, 25% USD, 5% JPY, 2% GBP, CHF and NOK 1% each. Currently, ICO has three issuance programmes: a 75 billion EMTN programme set up in 1996; a A$6 billion Kangaroo programme in place since 2005; and a 300 billion Samurai programme. ICO has been issuing in the Kangaroo market since May 2005 and since then has issued a total of A$4.15 billion. In the year to the beginning of September 2009 ICO had four outstanding benchmarks in this market totalling A$3.55 billion A$700 million in the October 2009s, A$1.35 billion in the March 2011s, A$1.2 billion in the October 2012s and A$300 million in the February 2014s. ICO will continue to look at the Kangaroo market with a strategic approach, aiming to further develop its yield curve, in accordance with Australian investors preferences. ICO has not yet issued in the Kauri bond market. ICO is wholly owned by the Kingdom of Spain (AA+/Aaa/AAA). There has never been a call on capital of the bank. Pursuant to its by-laws, all debt issued by ICO benefits from the statutory guarantee of the Kingdom of Spain. This guarantee is direct, explicit, irrevocable and unconditional. For this reason, ICO enjoys the same rating as the Kingdom of Spain AA+/Aaa/AAA awarded by the three major rating agencies and its debt is risk weighted. ICO is supervised as a credit institution by the Central Bank of Spain. The agency has developed risk procedures to limit liquidity, interest, currency, credit and operating risk. ICO s risk policy fulfills Basel II rules. ICO s funding needs in 2009 are approximately 16 billion. As at July ICO had already issued around 11.5 billion Rodrigo Robledo, Funding Manager investors@ico.es 3 1

9 ISSUER PROFILES INTER-AMERICAN DEVELOPMENT BANK OUTLOOK SUPRANATIONAL AAA/Aaa US$10.7BN/US$18-20BN (MINIMUM) 1BN (MINIMUM) About IADB Inter-American Development Bank (IADB), the oldest and largest regional multilateral development institution, was established in 1959 to support the sustainable economic and social development of Latin America and the Caribbean. IADB partners with countries to combat poverty and promote social equity through programmes tailored to local conditions. Working with both governments and the private sector, IADB seeks to promote sustainable economic growth, increase competitiveness, modernise public institutions and foster free trade and regional integration. IADB is owned by 48 countries 26 Latin American and Caribbean governments, the US (3 of voting share), Japan (5.), Canada (4.) and 19 non-regional governments. Its five largest shareholders are the US (30.), Argentina (10.8%), Brazil (10.8%), Mexico (6.9%) and Venezuela (5.8%). IADB has subscribed capital totalling US$100.9 billion, of which US$4.3 billion is paid-in capital and US$96.6 billion is callable capital. Callable capital is subject to call only for debt service payments. IADB has never made a call on its callable capital. With regard to borrowings IADB s policy is to limit the amount of its net borrowings (defined as the amount of borrowings plus gross guarantee exposure, less qualified liquid assets and the special reserve assets) to the subscribed callable capital stock of its non-borrowing member countries (the US, Canada and other non-regional members). The three largest non-borrowing shareholders provide 78% of the subscribed callable capital supporting IADB s borrowings and they are the US (6), Japan (1) and Canada (8%). IADB s funding strategy is based on the issuance of large global benchmark (primarily US dollars) bonds, bonds targeted to strategic markets and MTN transactions targeted to particular segments of demand. In its global benchmark USD and strategic markets IADB aims to develop a yield curve of benchmark securities and to promote liquidity for such bonds by obtaining broad sponsorship from underwriters, deepening the investor base by cultivating different types of investors in various regions, and its debt repurchase programme. As of August IADB had issued US$11.1 billion in 10 different currencies, with the top three being USD, AUD and CHF. IADB considers both the AUD and NZD as strategic markets and it aims to build a yield curve and large liquid benchmarks in these currencies over time. When considering re-openings the first priority is to ensure existing bondholders are not harmed, especially in terms of performance. A re-opening is only considered to meet investor demand. IADB established its Australian Dollar Medium-Term Note Programme in July Its debut Kangaroo bond was issued in March 2001 a A$675 million November 2006 line. By the beginning of September 2009 IADB had issued over A$4.3 billion in the Kangaroo market, with A$3.625 billion outstanding in six maturities ranging from December 2010 to February During the 2009 year so far IADB has issued two Kangaroo bonds: a A$575 million August 2019 line and a A$750 million May 2014 bond. IADB is on the Reserve Bank of Australia s list of repo-eligible borrowers. IADB issued its debut Kauri bond in December 2007 with a NZ$100 million April 2015 line that was tapped in January 2008 to total NZ$300 million. By the beginning of September 2009 IADB had NZ$400 million outstanding across two maturities. So far in 2009 the bank hass issued one Kauri bond a NZ$100 million May IADBs Kauri bonds are repoeligible with the Reserve Bank of New Zealand. In addition to Kangaroo and Kauri issuance, IADB has also issued in Uridashi, eurobond and global formats. When considering all the issuance formats, the AUD and NZD have consistently ranked in the top three currencies of issuance for IADB from (with the exception of 2007). Laura Fan, Head of Funding lauraf@iadb.org K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

10 INTERNATIONAL FINANCE CORPORATION SUPRANATIONAL AAA/Aaa OUTLOOK FUNDING VOLUME* US$8BN/US$9.5BN *Fiscal years ending Jun and Jun About IFC International Finance Corporation (IFC), a member of the World Bank Group, was founded in 1956 to promote and support economic growth in developing countries by financing private sector investment, mobilising capital in the international financial markets, and providing advisory services to businesses and governments. IFC helps companies and financial institutions in emerging markets create jobs, generate tax revenues, improve corporate governance and environmental performance and contribute to their local communities. The goal is to improve lives, especially for the people who most need the benefits of growth. IFC emphasises five strategic priorities for maximising its sustainable development impact: Strengthening its focus on frontier markets, particularly the SME sector; Building long-term partnerships with emerging global players in developing countries; Differentiation from its competitors via sustainability; Addressing constraints to private sector investment in infrastructure, health, and education; and Developing domestic financial markets through domestic market borrowings, institution building, and the use of innovative financial products. IFC s membership consists of 182 governments worldwide, which must also be a member of the International Bank for Reconstruction and Development (IBRD). The biggest shareholder is the US with 23.5%, followed by Japan (5.86%), Germany (5.35%), and the UK and France (5.02% each). The seven largest members of the Organisation for Economic Cooperation and Development hold 51.7% of IFC s total subscribed capital. There was a capital increase in the early 1990s. IFC has preferred creditor status among borrowing members. Although IFC s portfolio is fully exposed to commercial risk as it lends to private sector companies without the benefit of sovereign guarantees, IFC loans have never been included in a sovereign debt rescheduling, nor have payments to the IFC ever been permanently interrupted by a general debt-servicing moratorium. Investment in a single obligor may not exceed 4% of net worth plus general reserves on loans. Total exposure to a single risk sector may not exceed 12% of net worth plus general reserves on loans. By country, the exposure limit is 2 of net worth plus general reserves on loans. IFC raises virtually all the funds for its lending activities through the issuance of debt obligations in the international capital markets. Borrowings are diversified by currency, maturity and market to provide flexibility and cost effectiveness. A consistent triple-a credit rating based on conservative policies and excellent financial performance has assisted in building significant and distinct name recognition in the marketplace for IFC. In fiscal year 2009 IFC raised the equivalent of US$8 billion. The funding programme for fiscal year 2010 is US$9.5 billion. IFC debuted in the Kangaroo bond market in February 2008 with a A$500 million five-year bond, following a roadshow to Australian investors in December The 2013s were tapped for a further A$500 million in June A year later IFC issued a A$750 million five-year bond, which was increased in July by another A$500 million. IFC s operations have been growing rapidly, which should facilitate regular Kangaroo issuance in the years ahead. These borrowings will be both selective increases to outstanding bond issues to increase their liquidity as well as new issues in benchmark maturities. IFC debuted in the Kauri bond market in August 2007, with a NZ$300 million five-year line which it increased later the same month to NZ$500 million. In July 2009 IFC issued another NZ$150 million five-year Kauri bond. IFC s growing funding requirements means it will continue seek opportunities to issue in the Kauri market. John Borthwick, Deputy Treasurer jborthwick@ifc.org 3 3

11 ISSUER PROFILES KFW BANKENGRUPPE OUTLOOK AGENCY AAA/Aaa/AAA 75.3BN/UP TO 75BN US$1-5BN 3-5BN About KfW KfW Bankengruppe (KfW) is Germany s largest development agency serving the domestic and international public policy objectives of the government of the Federal Republic of Germany. KfW conducts its business in the following six operative business areas: KfW Mittelstandsbank (KfW SME Bank): focuses on small- and medium-sized enterprises and other commercial clients; KfW Privatkundenbank (KfW Private Client Bank); KfW Kommunalbank (KfW Municipal Bank): responsible for public clients such as municipalities and regional promotional banks; Export and project finance (KfW IPEX-Bank): according to an understanding with the EU this business is conducted by the 10 subsidiary KfW-IPEX Bank, which will fund itself through KfW; Promotion of developing and transition countries (KfW Entwicklungsbank and DEG); and Financial markets: KfW s treasury, funding, securitisation, and other capital markets-related activities. The Federal Republic of Germany owns 8; the 16 federal states own 2. KfW has an explicit federal debt guarantee and it also benefits from the institutional liability (Anstaltslast), which means the Federal Republic, as the constituting body of KfW, has an obligation to safeguard KfW s economic basis. State-of-the-art risk management instruments and processes are used to identify, control and mitigate significant risk potentials with respect to credit, market, liquidity as well as operational risks. In addition, stress tests are regularly undertaken to anticipate and quantify the effects of different downturn scenarios on KfW s overall risk exposure. KfW is the fifth-largest issuer of bonds in Europe. The bank s funding activities are based on a three-pillar strategy: benchmark programmes, other public bonds, and private placements. The benchmark programmes feature large and liquid bonds in benchmark maturities in EUR and USD in global format. KfW also issues public bonds outside the benchmark programmes, thus offering its investors a broad range of securities highly diversified in currencies, terms and coupon structures. KfW also issues bonds and notes in the form of private placements so as to satisfy demand from institutional investors for customised products. The structure, currencies, maturities and repayment of these bonds and notes are flexible and tailored to the specific investment needs of individual investors. In 2008 KfW issued in more than 390 transactions in 23 different currencies with a total volume of 75.3 billion. In the year to the end of August 2009, KfW had already issued in 17 different currencies and will continue to fulfill the strong demand for liquid bonds from issuers with a first class standing. By August KfW had raised 62.2 billion. KfW s most important currencies so far in 2009 have been euro (45%) followed by USD (36%), sterling (7%), yen (4%) and AUD (3%). By September KfW had issued A$10.75 billion in the Kangaroo bond market out of which A$2.6 billion was issued in eight transactions in Overall, KfW has A$9.05 billion outstanding in 11 lines. Therefore AUD ranks fifth in KfW s funding programme. KfW has also been active in the AUD eurobond and Uridashi markets. In NZD KfW focuses on issuance in EMTN and Uridashi format and has an outstanding volume of NZ$3.7 billion. TREASURER Dr. Frank Czichowski CAPITAL MARKETS: Horst Seissinger Petra Wehlert Dr. Bernd Siegfried K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

12 KOMMUNALBANKEN NORWAY OUTLOOK AGENCY AAA/Aaa 2 US$10.5BN/US$14BN 1BN management operations is kept to a minimum through stringent policies on entering into financial contracts. KBN s financial policies do not permit any outright interest rates and exchange rate risk. Liquidity risk is minimised by always keeping liquidity which covers 12 months net debt redemptions plus budgeted new lending. The total liquidity portfolio is invested in liquid assets of high credit quality. About KBN Kommunalbanken Norway (KBN) was established by an Act of Parliament in 1926/1999 as a governmentowned institution with a public policy mandate from the central government to provide low-cost funding to the Norwegian local government sector. Since June 2009 KBN has been wholly owned by the Kingdom of Norway. The local government sector in Norway is closely monitored and supported by the central government and KBN has never suffered a loss or default on its loan portfolio since establishment 80 years ago. KBN benefits from a maintenance obligation from the central government and in this statement it affirms: The Kingdom of Norway considers it to be its duty to ensure that KBN is always in a position to meet its financial obligations. The maintenance obligation underlines the central government s commitment to KBN as a government funding agency and the importance it places on KBN as Norway s main provider of low-cost finance to the local government sector. The central government considers it extremely unlikely that KBN should require emergency state assistance due its exceptionally high quality asset base. The Kingdom of Norway regulates the municipal sector to which KBN lends and under the Local Government Act municipalities have a strong implicit central government guarantee and are prohibited from filing for bankruptcy. They are also subject to extensive oversight by the central government. No municipality has ever failed to pay its debt and KBN has not experienced a loan loss since it was founded in Credit risk for loans to local governments only relates to potential late payment of interest and instalments. Credit risk arising from KBN s funding portfolio and liquidity Due to large accumulated budget surpluses, currently at approximately 10 of GDP, the Kingdom of Norway does not issue any foreign currency debt. KBN, which represents both Norway as owner and the Norwegian public sector, is the closest proxy to Norwegian sovereign debt available in the international capital markets today. As a result, KBN offers investors a unique opportunity to gain exposure to the Norwegian public sector and one of the world s wealthiest economies. KBN s aim is to follow a flexible and diversified funding strategy. To meet its funding objective, KBN has established a strategy based on four building blocks institutional niche markets (15-25%); retail issuance (20-3); benchmark issuance (20-3); and private placements (30-4). In 2008 more than 95 per cent of funding was raised outside Norway through 269 individual transactions in 13 currencies, amounting to US$10.5 billion equivalent. KBN remains committed to both the Kangaroo and Kauri bond markets. Subject to investor appetite, the aim is for annual issuance in these markets of up to 5% of total funding volume. KBN has issued AUD in the Kangaroo, Uridashi and eurobond markets. By the beginning of September 2009 the agency had issued a total of A$1.4 billion in the Kangaroo market, with A$900 million outstanding in three maturities. KBN s Kangaroo bonds are repo-eligible with the Reserve Bank of Australia. KBN debuted in the Kauri bond market in October by September 2009 the agency had issued a total of NZ$675 million in two maturities in the Kauri market, all of which is still outstanding. KBN s Kauri bonds are repo-eligible with the Reserve Bank of New Zealand. Thomas Møller, Executive Vice President & CFO thm@kbn.com 3 5

13 ISSUER PROFILES MUNICIPALITY FINANCE OUTLOOK AGENC AAA/Aaa IN EU MARKETS 4.5BN/ 5BN 1BN About MuniFin Municipality Finance (MuniFin) is the only public sector-owned credit institution in Finland specialising purely in the local government sector. MuniFin offers funding to municipalities, municipal federations and organisations owned or controlled by those, and housing corporations that serve the public good, by raising funds in the Finnish and international capital markets. The agency was established in 2001 after the merger of old Municipality Finance (est. 1989) and Municipal Housing Finance (est. 1993). MuniFin is owned 53.3% by Finnish local governments together with the Association of Finnish Local and Regional Authorities. The balance is owned by the Local Government Pension Institute (LGPI) (30.7%) and the central government of Finland (16%). The LGPI, municipalities, central government, joint municipal boards, central municipal organisation, corporations owned completely or on a majority basis by municipalities and companies owned by such corporations are the only entities that are allowed to be shareholders in Municipality Finance without special consent. The total number of shareholders as of June is 305. There has never been a call on capital of the credit institution. Absolute guarantees by municipalities or joint municipal boards, or a deficiency guarantee plus a deficiency state guarantee, are accepted as security for loans. Loans are granted to municipalities or joint municipal boards without surety. MuniFin s debt programmes and all other financial obligations are guaranteed by the Municipal Guarantee Board (Kuntien takauskeskus) (MGB) (AAA/Aaa), established by law in The 328 Finnish member municipalities representing more than 99% of the local population are jointly liable on a pro rata basis for the MGB s commitments. All debt guaranteed by the MGB is weighted by the Bank of International Settlements. (investments) Investment guidelines are approved annually by the Board. The liquidity buffer portfolio has conservative credit rating requirements and high requirements on secondary market liquidity. Prefunding is mainly invested in highly-rated financial money market instruments and floating rate notes. All investments are currently in euro and no foreign currency risk is allowed. According to Finnish law the maximum exposure to a single obligor may not exceed 25% of own funds. MuniFin is an active and frequent issuer in the Asian, Swiss and euro markets. The Japanese market especially has been an important source of funding for several years. Most of the funding transactions are done under MuniFin s standardised issuance programmes and proceeds from other currencies are usually swapped back to euros. During 2009 MuniFin had issued in 15 different currencies by the end of July and will continue its strategic plan of building up issuance in emerging market currencies, both in local markets and via eurobond format. By July MuniFin had raised the equivalent of 4.5 billion. In 2008 MuniFin raised a total of 4.5 billion in medium- and longterm funds, with the AUD the fourth-largest currency of issuance. The funding volume for 2009 is around 5 billion. MuniFin established a A$1 billion Kangaroo programme in 2006 and issued its inaugural transaction under this programme in April 2007 a A$200 million 6.5% April 2011 bond. This was tapped in January 2008 by A$100 million and in August 2008 by a further A$90 million. By the beginning of September 2009 MuniFin had a total of A$1.26 billion of AUD-denominated issues outstanding, most of which are Uridashi bonds. MuniFin debuted in the Kauri bond market in May 2008 with a NZ$100 million June 2011 bond. This was increased in September 2008 by NZ$100 million and again in November 2008 by NZ$75 million. By the end of July 2009 the agency had a total of NZ$589 million of NZD-denominated issues outstanding, most of which are Uridashi bonds. *SEE Q&A ON P15 FOR MORE DETAIL ON MUNIFIN Timo Ruotsalainen, Head of Funding funding@munifin.fi K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

14 NEDERLANDSE WATERSCHAPSBANK OUTLOOK AGENCY AAA/Aaa 2 6.5BN/ 7BN 1BN About NWB Bank Nederlandse Waterschapsbank (NWB Bank) was established in 1954 with the objective of providing sound financial services to the public sector. The shareholders are the Dutch government for 17%, provinces for 2% and the waterboards for the remainder. The core business is providing long-term lendings to the public sector municipalities, waterboards, the social housing sector and the healthcare sector. These are all local authorities by themselves or guaranteed by local authorities and the Dutch government. They all have a zero solvency weighting so it can be argued there is no credit risk. There has never been a default. NWB Bank has AAA/Aaa ratings from Standard & Poor s and Moody s Investors Service. The ownership of the shares of NWB Bank is restricted by the Articles of Association. Only the State of the Netherlands, local authorities and other public bodies can be shareholders. The structure of stakeholders has never been changed since the bank was founded in 1954 and changes are not expected. The Dutch State owns 17%, provinces 2% and the waterboards the remaining 81%. Waterboards are responsible for the flood control, water quality, water quantity and treatment of urban wastewater. The first came into existence in the 13th century, which makes them the oldest form of government in the Netherlands. They are decentralised public authorities their legal status is similar to that of municipalities. They levy their own taxes and can apply rules to several parties such as residents, property owners and landowners. Loans are to local authorities or entities guaranteed by local authorities and/or the Dutch government. The Articles state that shares in NWB Bank can only be held by the Dutch State and other public sector bodies. It can be argued that there is no credit exposure, only to the Dutch State. Regarding assets, 99% carry a zero per cent risk weighting and the Bank for International Settlements (BIS) ratio is 53%. All assets are eligible for repo with the European Central Bank. NWB Bank has a 40 billion debt issuance programme. Total outstanding by mid-august 2009 was 33 billion. All proceeds are swapped directly to euro. The strategy is to aim to complete benchmarks in euro and US dollars each year. These are strategic deals and their size is one billion or bigger. By July NWB Bank had raised 5.5 billion for the year to date, issued in six different currencies. The Kangaroo market is strategic in the sense that NWB Bank is prepared to pay a few basis points more than in other markets. NWB Bank is keen to make its presence in this market a success. NWB Bank debuted in the Kangaroo bond market in March 2005 and since then has issued A$1.1 billion in four maturities by the beginning of September 2009, all of which were still outstanding. The agency also has a small amount of Aussie dollar eurobonds outstanding. NWB Bank has amended its Kangaroo programme to be able to launch Kauri bonds off the existing Kangaroo documentation. The agency is looking now to do the first Kauri issue. NWB Bank s Kangaroo bonds are repo-eligible with the Reserve Bank of Australia, while the agency s Kauri bonds will be repo-eligible with the Reserve Bank of New Zealand. *SEE Q&A ON P11 FOR MORE DETAIL ON NWB BANK Tom Meuwissen, General Manager, Treasury Bouke den Hoed, Manager, Treasury treasury@nwbbank.com 3 7

15 ISSUER PROFILES NORDIC INVESTMENT BANK OUTLOOK SUPRANATIONAL AAA/Aaa 4.7BN/APPROX 4.0BN 1BN About NIB Nordic Investment Bank (NIB) is a multilateral financial institution that operates in accordance with commercially sound banking principles. The bank was originally founded by the five Nordic countries of Denmark, Finland, Iceland, Norway and Sweden. Membership of NIB was broadened at the beginning of 2005 when Estonia, Latvia and Lithuania joined as shareholders. NIB s operations are governed by an international agreement among the member countries and statutes pertained thereto. NIB finances private and public projects which have high priority with member countries and their borrowers. The bank finances projects both within and outside member countries. NIB offers its clients long-term loans and guarantees on competitive market terms and it acquires the funds to finance its lending by borrowing on the international capital markets. NIB enjoys strong support by its owners. The supranational s authorised capital amounts to billion and consists of both paid-in and callable capital. NIB s member countries have subscribed to the authorised capital in proportion to their gross national income: Denmark (21.3%), Estonia (0.7%), Finland (18.5%), Iceland (0.9%), Latvia (1.1%), Lithuania (1.6%), Norway (19.1%) and Sweden (36.7%). In total, 10.1% of the subscribed authorised capital stock is paid in. The remainder of the authorised capital consists of callable capital, which is subject to call if the Board of Directors deems it necessary. There has never been a call on capital of the bank. NIB s capital quality remains excellent, with Aaa rated member countries holding 96%. Altogether, investment-grade member countries hold 10 of paid-in capital. NIB has a financial policy which defines and sets guidelines for its risk management set-up. Credit, market, liquidity and operational risks are managed carefully, with risk processes closely integrated into business processes. NIB s ordinary lending ceiling corresponds to 25 of the authorised capital and accumulated general reserves. NIB s asset and liability management methods and risk management tools enable the bank to issue in different currencies, structures, maturities and amounts. Issues are mainly documented under existing debt programmes. However, when required, this can also be done with standalone documentation. NIB has issued in more than 36 different currencies. The bank has been active in all the established currencies, including Nordic currencies, USD, euro, AUD, sterling, yen and HKD. To broaden its funding base, NIB also actively studies possibilities and issues in emerging and developing markets, for example in Eastern Europe and Asia. NIB s funding target for 2009 is around 4 billion. In accordance with the bank s strategy it aims to have global diversification (investor base and currency) and a suitable duration to match NIB s commitments. At August 2009 NIB had carried out 57 transactions totaling 3.1 billion. In April NIB launched and priced its inaugural five-year 1 billion benchmark, which has a maturity of five years and pays a coupon of 3%. In 2008 NIB raised the equivalent of 4.7 billion, with AUD the third-largest currency of issuance. NIB has issued Australian dollars in both the Uridashi and Kangaroo bond markets. The bank debuted in the Kangaroo market in 2006 and by the beginning of September 2009 had A$1.8 billion outstanding in three different maturities (with A$500 million due to mature on August 24). NIB priced a 6% A$300 million five-year issue in August NIB priced its inaugural Kauri deal a NZ$400 million three-year in September In June 2009 NIB priced a NZ$100 million increase to its April 2015 bond. The bank now has NZ$850 million outstanding in this market in two maturities. Jens Hellerup, Director, Deputy Head of Funding & Investor Relations jens.hellerup@nib.int K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

16 RENTENBANK AGENCY AAA/Aaa/AAA OUTLOOK 11BN/ $10BN (MINIMUM) 1BN (MINIMUM) About Rentenbank Rentenbank is a Federal German development agency with a public mission to support agribusiness and the rural areas in Germany. The bank has almost no credit exposure to end-borrowers. Instead, Rentenbank refinances local banks, which on-lend the funds to their customers and assume the credit risk. Rentenbank is supervised by the Federal Ministries for Agriculture and Finance and is exempt from corporate income and trade tax due to its public mission. Rentenbank s founding capital was raised through a public charge imposed on agricultural land in Germany from 1949 to This charge was established by a federal law, the Law on the Rentenbank Land Charge (Gesetz über die Rentenbankgrundschuld), dated May Rentenbank has no shareholders and Germany s federal parliament exercises ultimate control over the bank through legislative action. Rentenbank benefits from the Anstaltslast, or institutional liability, of the Federal Republic. This means the Federal Republic will safeguard the economic basis of Rentenbank; keep it in a position to pursue its operations throughout its existence as a statutory body under public law; and in the event of financial difficulties enable it by financial contribution or in some other appropriate manner to perform its obligations when due. The Federal Republic would not, under Anstaltslast, be permitted to allow Rentenbank to default on an obligation; the Federal Republic would be required on its own authority to take steps to enable Rentenbank to perform the obligation when due. Accordingly, while Anstaltslast does not constitute a formal guarantee of the obligations by the Federal Republic, and its creditors do not have a direct claim against the Federal Republic under Anstaltslast, the effect of Anstaltslast is that Rentenbank s obligations to the holders of any of its securities are fully backed by the full faith and credit of the Federal Republic. The obligation of the Federal Republic under Anstaltslast constitutes a legally-established charge on public funds that is payable without the need for appropriation or any action by the federal parliament. Rentenbank has a strong loan portfolio, is well capitalised, has a strong focus on cost control and is very risk conscious. The bank has no exposure to structured credit products. Rentenbank s general funding strategy is to be successfully positioned as an agency borrower with a strategic market approach. This includes regular benchmark issuance in euro and USD; excellent market access in all maturities through a broad range of available funding products and currencies; and continuous investor relations activities. For 2009 the bank plans a total of medium- and long-term funding in the area of 10 billion slightly lower than in This will be comprised of up to four euro benchmarks and USD global bonds with maturities up to 10 years and liquid issues in non-core dollar and Scandinavian currencies as well as GBP and JPY. There is also a stronger focus on domestic placement both for bonds and loans. The volume issued in the 2009 year to July 31 was 6.5bn in five different currencies. Rentenbank debuted in the Kangaroo market in July 2002 and by September had issued A$7.85 billion in this market in seven maturities, six of which are still outstanding for a total of A$7.05 billion. In 2009 issuance will be subject to investor demand and market conditions. It is open to a mix of new issues and well-supported increases in maturities from three to 10 years. Rentenbank also has a small amount of Aussie dollar EMTNs outstanding. The agency s Kangaroo issues are repoeligible with the Reserve Bank of Australia. Rentenbank debuted in the Kauri bond market in 2007and now has NZ$710 million outstanding in three maturities. The agency s Kauri bonds are repo-eligible with the Reserve Bank of New Zealand. Rentenbank has also issued NZ dollars in the eurobond and Uridashi markets. Stefan Goebel Leopold Olma Head of Treasury Head of Funding goebel@rentenbank.de olma@rentenbank.de 3 9

17 ISSUER PROFILES WORLD BANK (INTERNATIONAL BANK FOR RECONSTRUCTION & DEVELOPMENT) SUPRANATIONAL AAA/Aaa OUTLOOK FUNDING VOLUME US$44BN/US$30-35BN US$1-6BN 1-3BN * Fiscal years ending Jun and Jun About World Bank (IBRD) International Bank for Reconstruction and Development (IBRD), known in the capital markets as World Bank, is a global development cooperative owned by its 186 member countries. World Bank s goal is to work with member countries so they can achieve equitable and environmentally-sustainable economic growth that reduces poverty and improves standards of living. The bank provides financial solutions, strategic advisory services and specialised expertise that help solve national, regional and global challenges such as poverty and climate change. Its mission to fight poverty and investments in sustainable development makes World Bank bonds suitable for sociallyresponsible investors. World Bank is also the treasury manager for the International Finance Facility for Immunisation, the world s first multilateral issuer that provides grants for a specific development purpose health and immunisation programmes. World Bank is owned by 186 countries. Its five largest shareholders based on percentages of voting power are the US (16.4%), Japan (7.9%), Germany (4.5%), France (4.3%), and the UK (4.3%). World Bank s 186 member shareholders support its credit through callable capital that can be called to satisfy bondholders claims and certain guarantee obligations. There has never been a call on capital of the bank. At June the subscribed capital of IBRD was US$189.9 billion, of which US$11.5 billion had been paid in and US$178.4 billion was callable. To manage shareholders and creditors risk, World Bank has set risk management guidelines. Under its gearing ratio policy the bank may not have more loans and guarantees outstanding than its subscribed capital, reserves and surplus. World Bank is one of the most recognised and innovative borrowers in the international capital markets with achievements that include the very first currency swap in the international capital markets (1981), the first ever global bond (1989), the first fully electronic bond offering (2000) and a number of firsts in many markets and structures in various capital markets. World Bank debt products provide investors with the reassurance of a superior credit rating, a wide choice of products, and strong secondary market performance for liquid World Bank benchmark bonds. World Bank also customises its debt offerings to meet investors specific asset and liability needs. IBRD s debt products include large USD global bonds and bonds tailored to both retail and institutional investors in a variety of currencies. For fiscal year 2008 ending on June , World Bank raised US$19 billion in medium- to longterm funding. The AUD was the second-largest currency of issuance during the year. For fiscal year ending June IBRD issued US$44 billion in medium- to long-term funding, while the expected volume for the next fiscal year ending June is US$30-35 billion. World Bank has issued substantial volumes of AUD and NZD in the Uridashi market and it has also issued in the euro- Aussie market. The supranational debuted in the Kangaroo bond market in 1999 with a A$500 million May 2003 bond which was increased twice, to total A$1 billion. In 2006 IBRD returned to the Kangaroo market with a A$500 million 10-year deal. IBRD now has A$500 million outstanding in this market in a single bond which matures in November World Bank opened the Kauri bond market for the supranational, sovereign and agency sector in July The bank s inaugural Kauri deal was a NZ$350 million July 2014 global Kauri bond. That deal was followed with a NZ$100 million July 2012 bond targeted at retail and institutional investors, issued in July In 2009 World Bank added to its Kauri curve with a NZ$300 million December 2014 bond. The bank has followed the New Zealand market for many years it first launched a NZD global bond in Capital Markets Fax / debtsecurities@worldbank.org K A N G A N E W S / T D S E C U R I T I E S S S A Y E A R B O O K O C T O B E R

18

19