DATA ON DANISH PUBLIC FOREIGN BORROWING Danmarks Nationalbank

Transcription

1 June 1998 DATA ON DANISH PUBLIC FOREIGN BORROWING Danmarks Nationalbank

2 DATA ON DANISH PUBLIC FOREIGN BORROWING Print: J.H. Schultz Grafisk A/S Number printed: 600 ISSN: Danmarks Nationalbank Havnegade 5 DK-1093 Copenhagen K Figures for current full year are estimates. Historical data may in some cases be provisional. Details may not add because of rounding-off. Conventional signs: bn = billion = 1,000 millions mn = million.. = data not available 0 = nil or negligible - = irrelevant

3 DATA ON DANISH PUBLIC FOREIGN BORROWING Introduction... 5 Table 1 Central Government Debt Central Government Foreign Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith Central Government Foreign Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith Central Government Swaps Central Government Swaps Bonds Held by The Kingdom of Denmark, Own Issues Service on Central Government Foreign Debt Outstanding as of April Redemption of Central Government Foreign Debt Outstanding as of April Kingdom of Denmark Ratings Total Debt by of Entities Guaranteed by the Kingdom of Denmark The Mortgage Bank Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith The Mortgage Bank Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith The Mortgage Bank Swaps The Mortgage Bank Swaps Great Belt Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith Great Belt Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith Great Belt Swaps Great Belt Swaps A/S Øresundsforbindelsen Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith A/S Øresundsforbindelsen Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith A/S Øresundsforbindelsen Swaps A/S Øresundsforbindelsen Swaps Øresundskonsortiet Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith Øresundskonsortiet Borrowing Transaction 1998 and Swaps Accepted in Connection Therewith Øresundskonsortiet Swaps Øresundskonsortiet Swaps Economic Indicators Central Government Finances Balance of Payments Denmark's Foreign Assets and Liabilities General Elections to the Folketing , and Seats since Last Election Forecast for the Danish Economy Addendum OECD Economic Outlook No

4 Introduction Data on Danish Public Foreign Borrowing is a booklet, published from time to time (the latest previous edition was in June 1997) and covering the management of the foreign debt of the Kingdom of Denmark. The booklet includes a detailed description of the foreign transactions carried out in 1997 and in the beginning of 1998 by the Kingdom, and both foreign and domestic transactions by entities guaranteed by the Kingdom. These entities comprise: - The Mortgage Bank, an entity under the Ministry of Finance funding special investments of public interest. - Great Belt which is responsible for the construction of a road and railway connection between the islands Zealand and Funen. - A/S Øresundsforbindelsen which is responsible for the on-shore constructions in Denmark related to the bridge/tunnel to Sweden, including a rail connection between Copenhagen Airport and Copenhagen Central Station. - Øresundskonsortiet which is a consortium responsible for construction of the coast to coast connection between Denmark and Sweden. This consortium is jointly guaranteed by the Kingdom of Denmark and the Kingdom of Sweden. On May a partnership between the municipality of Copenhagen and the Danish State called Ørestadsselskabet I/S was established. The two partners are jointly and severally liable for all obligations of the partnership. Ørestadsselskabet I/S is responsible for the development of the Ørestad (a township stretching from central Copenhagen southward on the Island of Amager) and the construction and operation of the new City Train Line in Copenhagen. Neither transactions of Ørestadsselskabet I/S nor transactions carried out by public entities not guaranteed by the Kingdom, e.g. local governments, are covered by this booklet. Danmarks Nationalbank - the Danish central bank - acts as an agent to the Ministry of Finance in the area of government borrowing, including the formulation of strategies for both domestic and foreign borrowing. The ultimate responsibility for the management of the government debt rests with the Ministry of Finance, but within quarterly guidelines the Nationalbank is authorised to carry out the necessary debt transactions on behalf of the government. The legal basis for the borrowing by the Kingdom of Denmark is Act No of December on Authorisation for Central Government Borrowing. The maximum for total outstanding government debt is 950 bn including both domestic and foreign debt. As of April total government debt was bn. 5

5 On the following pages a brief description is given of the general management of the foreign debt of the Kingdom of Denmark. The main purpose of this booklet is, however, to supply foreign investors and others with information on the size of the debt of the Kingdom and of public entities guaranteed by the Kingdom, information on Danish macroeconomic data and other information of interest to foreigners. For further information on both domestic and foreign debt of the central government (and on the Danish securities market in general) reference is made to the booklet "Danish Government Securities..." published yearly by Danmarks Nationalbank, the latest being "Danish Government Securities 1998". The Norm for Foreign Borrowing The size of the foreign borrowing by the Kingdom in any year is determined by the central government borrowing norm which is an agreement between Danmarks Nationalbank and the government. The norm states that redemption on the foreign debt (including securities bought back from the market and early redemption) is to be financed by new foreign borrowing in any year. It is possible to deviate from the norm for foreign borrowing. If Danmarks Nationalbank has to intervene in order to support the Danish Krone to such an extent that its foreign exchange reserves become too low the foreign borrowing may exceed redemption on the foreign debt falling due. On the other hand, should the purchase of foreign currency by Danmarks Nationalbank result in a larger foreign-exchange reserve than considered necessary, it may be decided to reduce the foreign borrowing relative to the norm so that redemption will not be fully refinanced. However, according to the Maastricht Treaty the balance on the central government's account with Danmarks Nationalbank should always be positive. The proceeds of new foreign borrowing by the Kingdom of Denmark is sold to Danmarks Nationalbank and the corresponding amount in is credited to the government's account with the Nationalbank. Similarly, funds needed by the Kingdom for redemption are bought from Danmarks Nationalbank with a corresponding debiting of the government's account with Danmarks Nationalbank in. The purchase of own bonds during the year may increase the borrowing. It should be added, that according to the present norm for domestic borrowing, reductions of foreign debt may not be financed by extra domestic borrowing. In recent years the foreign debt has been reduced significantly, cf. Table A below. However, further reductions in 1997 were precluded because the balance on the central government's account with Danmarks Nationalbank would become too low. In 1998 the foreign debt will be reduced by 21 bn financed by the revenue from the central government's sale of shares in Tele Danmark A/S. 6

6 Borrowing and Debt Management The Kingdom of Denmark issues debt in a wide range of currencies, maturities and structures, and it does so in a variety of markets and legal environments. In 1994 the Kingdom of Denmark established an EMTN (Euro Medium Term Note) programme which has facilitated the documentation of transactions, making it possible to accept small, attractive transactions without incurring prohibitive documentation costs. In August 1997 the limit for the total outstanding debt under the EMTN programme was raised to the present USD 15 billion. In recent years there has been a tendency to use normal bond issues to a greater extent than previously. In addition, the structured issues have been more simple. For a number of years the Kingdom of Denmark has pursued a double-tracked borrowing strategy. A target for advantageous borrowing is fixed in terms of a sub- Libor level and conveyed to the banks. The target reflects the preferences of the Kingdom of Denmark with regard to the different maturities, as well as the actual opportunities in the different maturity segments. To the extent that advantagous borrowing opportunities do not provide the necessary funds the Kingdom of Denmark will, from time to time, be in the market for bond issues arranged as negotiated deals or as competitive bidding between invited investment banks. Borrowing in 1997 and in the Beginning of 1998 and Outlook In 1997 redemption on medium- and long-term loans amounted to 24.4 bn at nominal value while net redemption on commercial paper amounted to 10.8 bn at nominal value, cf. Table A. Medium- and long-term borrowing amounted to 36.0 bn. Net borrowing of 0.8 bn at nominal value, together with fluctuations in exchange rates, led to an increase in the foreign debt by 2.1 bn to bn. In the first quarter of 1998 redemption on medium- and long-term debt amounted to 8.3 bn while the commercial paper programme was not utilised. During the same period 2 medium/long term borrowing transactions totalling 2.4 bn have been carried out and 4.6 bn of the proceeds of the sale of shares in Tele Danmark were used to finance part of the redemption. In floating rate terms the cost of medium- and long-term borrowing were around DEM-Libor less 15 bp for 5-10 year maturities and lower for shorter maturities. 7

7 Table A. Central Government Foreign Borrowing and Debt. Commercial Other transactions Foreign Debt paper, net Net exchange end of Billion borrowing Borrowing Redemption borrowing adjustment period , , , , , Purchases of own bonds are registered as redemption. Of this 6.6 bn is not new borrowing but is a consequence of a reclassification of the XEU 1.3 bn from domestic to foreign debt. In 1998 as a whole total redemption on the foreign medium- and long-term debt amounts to 36 bn. It has been decided that the revenue from the central government's sale of shares in Tele Danmark to Ameritech, equal to 21 bn, should be used to reduce the central government's debt in foreign currencies. Consequently the foreign borrowing requirement for 1998 will be 15 bn. The Benchmark Distribution The management of the foreign borrowing of the Kingdom is closely linked to the management of the foreign-exchange reserves of Danmarks Nationalbank. The foreign debt of the Kingdom and the currency reserves of Danmarks Nationalbank are managed on a net basis in order to reduce the currency risk. The benchmark for the net currency distribution is agreed on a quarterly basis by the Ministry of Finance, the Ministry of Economic Affairs and Danmarks Nationalbank. The Danish exchange-rate policy aims at keeping the stable vis-à-vis the core ERM currencies with special focus on the DEM. Therefore the DEM is considered risk free when setting up the benchmark. From the start of stage 3 of the Economic and Monetary Union on January the euro will take over the role of the DEM. The net debt is managed within an absolute risk framework. This means that the benchmark is made up as an absolute distribution in billions of, the residual being the core ERM currencies. All new borrowing is at present in DEM, either directly or swapped. 8

8 Table B. Foreign Assets of Danmarks Nationalbank and Foreign Liabilities of the Kingdom of Denmark April Billion Assets Liabilities Net debt Benchmark USD JPY CHF GBP EMS Rest Total Net of stock of own bonds. DEM, FRF, BEF, NLG and XEU. Within certain limits (normally +/- 2.5 bn ) Danmarks Nationalbank is allowed to take positions against the benchmark. The benchmark and the actual distribution as at April are shown in Table B above. Interest-Rate Risk and Refinancing Risk With regard to interest-rate risk there is in general no direct co-ordination between the assets of the Nationalbank and the liabilities of the Kingdom. However, as marginal foreign liabilities and marginal foreign assets are required to have a short duration, it is ensured that neither the interest-rate risk of the government and the Nationalbank, nor the interest-rate risk of the two institutions taken together, is significantly affected by government borrowing to finance currency intervention or to prevent an overdraft on the government's account with the Nationalbank. During 1997 the duration on the foreign debt was gradually raised from 1.9 to 2.3 years. In addition to the interest-rate risk associated with the choice of duration there is a refinancing risk relating to a rise in the Kingdom of Denmark's borrowing costs relative to the general level of interest-rates. The refinancing risk is managed by aiming at a smooth redemption profile, cf. Figure A. This ensures that the refinancing requirement in a particular year does not constitute an excessive share of the foreign debt. However, this does not preclude the acceptance of a transaction not fitting the redemption profile, if it is considered to be very advantageous. 9

9 Figure A. Redemption Profile of the Foreign Debt. End of billion Note: The dotted line indicates the bench-mark for the redemption profile of the foreign debt. 10

10 Table 1. Central Government Debt million A. Debt I. Domestic debt denominated in 1. Fixed rate bonds , , , Floating rate bonds... 82,785 88,410 85, Lottery bonds... 1,200 1,200 1, Compulsory savings... 1,425 1, Treasury notes... 54,085 64,550 68, Treasury bills , Of which bonds held by the Issuer Domestic debt, total , , ,490 II. Foreign debt 1. In USD... 32,983 27,624 15, In CHF... 20,452 17,919 21, In DEM... 29,374 30,034 36, In NLG... 4,121 3,440 3, In FRF... 2,833 3,987 7, In GBP... 2,871 1,661 1, In XEU... 14,479 16,970 18, In JPY... 12,718 10,156 3, In other currencies... 4,501 4,241 11, Of which bonds held by the Issuer 3)... -1,569-1,574-1,126 Foreign debt, total , , ,975 Domestic and foreign debt, total , , ,465 Domestic and foreign debt, per cent of GDP B. Government deposits with the central bank ,855-35,254-45,206 C. The Social Pension Fund 1. Government securities ,009-30,212-36, Other securities ,215-81,164-82,254 The Social Pension Fund, total , , ,447 Net government debt (A-B-C) , , ,812 Net government debt, per cent of GDP 4) ) As of April As of January it was decided that the XEU 1.3 bn formerly considered as domestic debt should in future be considered as foreign debt. Booked at nominal value. Adjusted for exchange rate changes. 12

11 , , , , , , , ,326 85,010 57,147 41,241 30,345 20,722 16,760 9,848 4,346 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1, ,050 71,150 94, , ,697 84,499 49,140 36,215 49,250 55,485 58,339 56,238 58,385 51,234 50,000 52, , , , , , , , ,032 17,103 37,802 50,889 24,913 6,425 4,562 1,514 1,000 15,785 13,952 20,914 18,393 13,836 6,179 3,974 3,868 28,464 23,758 47,223 42,772 49,476 81,070 86,921 85,496 1,629 2,103 1,819 2,250 1, ,541 5,034 14,392 13,822 11,721 7,975 7,138 7,132 1,731 1,340 14,437 12,817 11,462 6,382 6,294 6,359 18,024 24,769 19,188 15,273 16,022 6,663 2,422 2,425 1,866 3,159 5,612 10,419 9,329 2,396 1,047 1,034 2,195 2, , ,374-1,151-1,338-2,754-6,654-9, , , , , , , , , , , , , , , , , ,649-30,927-88,781-55,266-33,677-31,052-30,727-1,727-38,872-43,611-45,270-50,143-68,889-83,435-92, ,836-88,583-93,105-96,689-82,517-65,336-54, , , , , , , , , , , , , , , ) This figure relates to central government debt only, it is not identical to the debt ratio measured in accordance with the Maastricht criteria which comprises all public debt. Note: + = liabilities, - = assets. 13

12 Table 2. Central Government Foreign Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million 27 Nov 3) DEM HSBC Trinkaus , Jan 10 3) USD Paine Webber Intl. + swap to DEM (U.K.) Ltd. Libor -22 bp 1,245 Jan 13 JPY 1, ) 2007 Daiwa Europe Ltd. + swap to DEM Libor -25 bp 52 Jan 13 3) DEM ) CSFB + Paribas 2,646 6) (Deutschland) OHG Jan 13 CHF Merrill Lynch Intl. + swap to DEM Libor -26 bp 872 Jan 23 3) USD IBJ Intl. + New Japan + swap to DEM Sec. Europe Ltd. Libor -34 bp 1,270 Jan 30 3) CAD Toronto Dominion + swap to DEM Bank Libor -26 bp 464 Feb 17 3) JPY 7, Morgan Stanley & Co. + swap to DEM Intl. Ltd. Libor -34 bp 365 Feb 20 3) USD ) UBS + swap to DEM Libor -45 bp 372 Mar 21 3) USD Yamaichi Intl. Ltd. + swap to DEM Libor -32 bp 2,575 Apr 28 3) GBP Nomura Intl. Plc + swap to DEM Libor -32 bp 1,055 May 9 JPY 5, Chase Manhattan Intl. + swap to DEM Ltd. Libor -22 bp 264 May 16 3) USD ) 4) 2001 Merrill Lynch Intl. + swap Libor -32 bp 632 May 21 JPY 3, ) 2007 IBJ Intl. Plc + swap to DEM Libor -22 bp 169 Jun 3 3) USD ABN AMRO Hoare + swap to DEM Govett Libor -19 bp 3,284 Jun 16 DEM Deutsche Bank AG 1,905 Jun 26 3) USD Deutsche Morgan Gren- + swap to DEM fell Libor bp 1,972 Aug 21 3) USD HSBC Markets Ltd. + swap to DEM Libor bp 3,526 Aug 22 3) JPY 2, ) 2007 Daiwa Europe Ltd. + swap to DEM Libor -24 bp 118 Aug 26 3) DEM 1,750.0 Libor 2001 Dresdner Kleinwort + swap -15 bp Benson ,663 14

13 Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Table 2 - continued Sep 9 3) JPY ) 2007 Sumitomo Finance + swap to DEM Intl. plc Libor -28 bp 29 Oct 7 DEM 1, Deutsche Bank AG 3,800 Oct 8 JPY 3, European Investment + swap to DEM Bank Libor -18 bp 188 Oct 30 3) USD Morgan Stanley & Co. + swap to DEM Intl. Ltd. Libor -23 bp 166 Nov 27 DEM ) 2004 BZW Deutschland + swap Libor -18 bp 476 Total... 36,005 Transactions with closing/settlement in Excluding commercial paper. Exchange rates as of settlement date. 3) Issued under the Kingdom's EMTN-programme. 4) Structured 5) Increased by million DEM on November ) Settlement price as of 22 January and 10 November. 7) 6 tranches each of USD 9,500,000. 8) 6 tranches each of USD 16,260,000. 9) Interest on AUD 33,860, ) Libor +10 bp, subject to cap structure. Source: Danmarks Nationalbank. 15

14 Table 3. Central Government Foreign Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Dec 1 3) 1997 DEM ABN Amro Hoare Govett 1,892 Feb 23 3) AUD The Toronto-Dominion + swap to DEM Bank Libor -23 bp 457 Mar 16 3) USD Tokyo-Mitsubishi Intl. + swap to DEM Plc Libor -21 bp 3,464 Apr 3 3) CZK 1, Citibank Intl. plc and + swap to DEM RBC Dominion Sec. Libor -28 bp 202 Apr 7 GBP EIB + swap to DEM Total... 6,249 Transactions with closing/settlement between January 1 and April Excluding commercial paper. Exchange rates as of settlement date. 3) Issued under the Kingdom's EMTN-programme. Source: Danmarks Nationalbank. Table 4. Central Government Swaps Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million 1996 Dec 17 3) DEM 7.8 Libor + 2 bp JPY Jan 16 DEM Libor -22 bp DEM ,245 Jan 20 DEM 13.6 Libor -25 bp DEM Jan 21 DEM Libor -26 bp DEM Jan 21 3) DEM 9.3 Libor +2 bp AUD Feb 4 4) USD DEM Feb 5 4) USD DEM Feb 5 4) USD DEM Feb 6 3) DEM 40.6 Libor +1 bp JPY 3, Feb 7 DEM Libor -34 bp DEM ,271 Feb 10 3) DEM 13.7 Libor +1 bp JPY 1, Feb 11 3) DEM 27.0 Libor +1 bp JPY 2,

15 Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million Table 4 - continued Feb 26 DEM Libor -26 bp DEM Feb 26 4) USD DEM ,326 Feb 26 3) DEM 27.2 Libor +1 bp JPY 2, Feb 28 3) DEM 14.0 Libor +1 bp JPY 1, Mar 11 4) USD DEM Mar 11 DEM 95.7 Libor -34 bp DEM Mar 12 4) USD DEM Mar 14 3) DEM 41.8 Libor +1 bp JPY 3, Mar 18 4) USD DEM Mar 19 4) USD DEM Mar 20 4) USD DEM Mar 21 3) DEM 13.7 Libor +1 bp JPY 1, Apr 2 4) USD DEM Apr 3 4) USD DEM Apr 3 3) DEM 13.6 Libor +1 bp JPY 1, Apr 11 DEM 97.8 Libor -45 bp DEM Apr 14 3) DEM 13.6 Libor +1 bp JPY 1, Apr 16 DEM Libor -32 bp DEM ,575 Apr 16 4) USD DEM Apr 21 4) USD DEM May 2 3) DEM 13.6 Libor +1 bp JPY 1, May 16 DEM Libor -32 bp DEM ,055 May 22 4) USD DEM May 22 4) USD DEM Jun 4 DEM 69.4 Libor -22 bp DEM Jun 6 DEM Libor -19 bp DEM ,284 Jun 13 DEM 44.3 Libor -22 bp DEM Jul 1 DEM Libor -32 bp DEM Jul 3 DEM Libor bp DEM ,972 Aug 29 DEM Libor DEM ,526 Oct 16 4) USD DEM ,323 Oct 20 4) USD DEM ,011 Oct 21 4) USD DEM Oct 22 4) USD DEM Oct 22 4) USD DEM Oct 23 4) USD DEM ,373 Dec 8 DEM 1, DEM 1,000.0 Libor bp ,808 Total... 39,034 3) Including swaps linked to specific issues but not accepted in connection therewith. Exchange rates as of start date. Asset swap connected to repurchase of bonds - JPY/AUD. Notes continue 17

16 Forward Foreign Exchange Transaction. Source: Danmarks Nationalbank. 4) Table 5. Central Government Swaps Acceptance date Receiving Millions Interest Millions Paying Interest Maturing year amount in million Total... 0 Including swaps linked to specific issues but not accepted in connection therewith. The table is brought up to date as of April Exchange rates as of start date. Source: Danmarks Nationalbank. 0 18

17 Table 6. Bonds Held by The Kingdom of Denmark, Own Issues. Coupon per cent Term Foreign debt value as of Apr (in currency mentioned) Bought during the period Apr Mar (in currency mentioned) Redeemed during the period Apr Mar (in currency mentioned) value as of Mar (in currency mentioned) value as of Mar in millions XEU / ,356,000 61,800, ,156, USD / ,100, ,100, Libor / ,437,000 bp CHF / ,840, ,840, DEM / ,000, ,000, / ,485, ,485, / ,394, ,394, /1998 5,000, ,000, FRF / ,000, ,000, GBP /2002 5,000, ,000, Libor bp 1993/ ,000, ,000, JPY / ,000,000, ,000,000, /1999 1,500,000, ,500,000, / ,000, ,000, / ,000,000,000 1,000,000,000 14,000,000,

18 Coupon per cent Term Table 6 - continued value as of Apr (in currency mentioned) Bought during the period Apr Mar (in currency mentioned) Redeemed during the period Apr Mar (in currency mentioned) value as of Mar (in currency mentioned) value as of Mar in millions AUD / ,330,000, ,330,000, Others Total... 0 Exchange rates as of March As of January the XEU 1.3 bn formerly considered as domestic debt was reclassified as foreign debt. Note: As is apparent from the table there has been a change of policy. Earlier purchased bonds were usually held in a special account until maturity. Now they will normally be cancelled on purchase. Source: Danmarks Nationalbank. 20

19 Table 7. Service on Central Government Foreign Debt Outstanding as of April Interest Redemption Total Billion Interest and redemption amounts are valued at exchange rates as of April Redemption schedule according to loan agreements, i.e. excluding possible but not actually decided early repayments. Loans with put options are assumed to be redeemed at earliest put. May 1 to December Note: Service on Commercial paper is not included. The XEU 1.3 bn issue has been reclassified by January as foreign debt, and is therefore included. Source: Danmarks Nationalbank. 21

20 Table 8. Redemption of Central Government Foreign Debt Outstanding as of April Million January ,644 February March April ,516 May ,056 June ,834 0 July ,907 August... 15, ,271 September... 1,410 4,764 1,276 October , November December... 1,589 2,629 1,214 Total... 19,621 19,737 14,343 Redemption amounts are valued at exchange rates as of April Redemption schedule according to loan agreement, i.e. excluding possible, but not actually decided early repayments. Loans with put options are assumed to be redeemed at earliest put. Note: Service on Commercial paper is not included. Source: Danmarks Nationalbank. Table 9. Kingdom of Denmark Ratings. Standard & Poor's Corporation Moody's Investors Service Fitch IBCA 1981, March... AAA Aa 1982, September... AAA 1983, January... AA+ 1986, August... Aa1 1987, March... AA 1990, June... AA 3) 1991, October... AA+ 4) 1994, August... AA+ 1998, May... AA+ 5) 3) 4) 5) Subject to "Credit Watch". Moody's Aa category was split into 3 levels Aa1, Aa2 and Aa3, of which Aa1 is the highest. Designation of outlook: positive (under the programme started December 1989 of designating singleword outlooks for a one-to-three year time frame). Outlook: stable. Outlook: positive. Notes continue 22

21 Note: The ratings in this table reflect the valuation of long-term debt in foreign currency. The ratings of debt in and short-term debt in foreign currency are and have always been the highest possible with both S&P and Moody's. Table 10. Total Debt by of Entities Guaranteed by the Kingdom of Denmark. USD DEM CHF XEU JPY FRF NLG GBP BEF Other Per cent Mortgage Bank End End End End End End March Great Belt End End End End End End March A/S Øresundsforbindelsen End End End End End March Øresundskonsortiet End End End End End March End liabilities, i.e. after swaps, if any. To some extent the figures do not necessarily reflect the foreign currency exposure of the entities, which may have assets denominated in the same currencies. Distribution of foreign debt only (including Euro- issues). Source: The institutions mentioned. 23

22 Table 11. The Mortgage Bank Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Jan 31 *) Gudme Raaschou + swap to Cibor -34 bp 100 Feb 11 *) Nykredit Bank + swap to Cibor -42 bp 400 Feb 20 *) Gudme Raaschou + swap to Cibor -34 bp 100 Feb 24 JPY , Daiwa Europe + swap to DEM Libor -32 bp 27 Feb 26 *) Gudme Raaschou + swap to Cibor -36 bp + swap to Cibor -37 bp 200 Mar 4 *) Nykredit Bank 26 Mar 24 *) Gudme Raaschou + swap to Cibor -34 bp 75 Mar 24 *) Gudme Raaschou + swap to Cibor -34 bp 25 Apr 8 *) Gudme Raaschou + swap to Cibor -38 bp 100 Apr 8 *) Gudme Raaschou + swap to Cibor -39 bp 100 May Cibor 2004 EIB -10 bp 200 May Cibor 2002 EIB -10 bp 200 Jun 17 *) Gudme Raaschou + swap to Cibor -32 bp 50 Jun 18 *) Gudme Raaschou + swap to Cibor -32 bp 50 Jun 19 *) Gudme Raaschou + swap to Cibor -32 bp 50 Jun 20 *) Gudme Raaschou + swap to Cibor -32 bp 50 Jun 23 *) Gudme Raaschou + swap to Cibor -33 bp 75 Jun 27 *) Gudme Raaschou + swap to Cibor -32 bp 25 Jun 27 *) Gudme Raaschou + swap to Cibor -33 bp 25 Jun 30 *) Gudme Raaschou + swap to Cibor -33 bp 25 Jul 1 *) Gudme Raaschou 24

23 Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Table 11 - continued + swap to Cibor -32 bp + swap to Cibor -32 bp 50 Jul 2 *) Gudme Raaschou + swap to Cibor -32 bp 50 Jul 3 *) Gudme Raaschou + swap to Cibor -33 bp 50 Jul 4 *) Gudme Raaschou + swap to Cibor -33 bp 25 Jul 17 *) Gudme Raaschou + swap to Cibor -33 bp + swap to Cibor -33 bp 100 Jul 29 *) Gudme Raaschou + swap to Cibor -34 bp 100 Aug 1 *) Gudme Raaschou + swap to Cibor -36 bp 50 Aug 6 *) Gudme Raaschou + swap to Cibor -35 bp 150 Aug Gudme Raaschou 13 *) + swap to Cibor -37 bp 100 Total... 2,578 Transactions with closing/settlement in Exchange rates as of settlement date. *) Domestic issue. Source: The Mortgage Bank. Table 12. The Mortgage Bank Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Feb Cibor -10 bp Maturing year Lead Manager/Lender 2005 EIB All-in, per cent p.a. amount in million Total Transactions with closing/settlement between January 1 and March Exchange rates as of settlement date. Source: The Mortgage Bank. 25

24 Table 13. The Mortgage Bank Swaps Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million Jul 30 USD 20.0 Libor -12 bp Cibor bp Jul 30 USD 36.0 Libor -21 bp Cibor bp Jul 30 USD 25.0 Libor -12 bp Cibor bp Jul 30 USD 25.0 Libor -12 bp Cibor bp Sep 24 USD 24.0 Libor -31 bp FRF Dec Cibor + 5 bp Total... 1,105 Including swaps linked to specific issues but not accepted in connection therewith. Exchange rates as of start date. Source: The Mortgage Bank. Table 14. The Mortgage Bank Swaps Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million Total... 0 Including swaps linked to specific issues but not accepted in connection therewith. The table is brought up to date as of March Exchange rates as of start date. Source: The Mortgage Bank. 0 26

25 Table 15. Great Belt Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Dec 5 XEU EIB swap to USD Libor -30 bp 736 Dec 30 *) Unibank swap Cibor -32 bp 200 Jan 10 *) Unibank + swap Cibor -30 bp 200 Jan 17 *) Unibank + swap Cibor -33 bp 300 Jan 22 3) 4) JPY 4, Nomura + swap to USD Libor -25 bp 232 Jan 27 3) 4) JPY Nomura + swap to USD Libor -28 bp 48 Feb 25 GBP EIB + swap to USD Libor bp 528 Mar 25 *) Den Danske Bank + swap Cibor bp 200 Apr 1 *) Unibank + swap Cibor -35 bp 300 Apr 4 *) Den Danske Bank + swap Cibor bp 300 Apr 4 *) Carnegie + swap Cibor -38 bp 400 Apr 15 *) Unibank + swap Cibor -37 bp 500 Aug Gudme Raaschou + swap Cibor -35 bp 221 Sep 9 3) USD Nomura + swap to Cibor -24 bp 81 Oct 20 3) 4) JPY 2, Merrill Lynch + swap to USD Libor -28 bp 128 Total... 4,374 Transactions with closing/settlement in Exchange rates as of settlement date. 3) Issued under Great Belt's EMTN-programme. 4) Structured. *) Domestic issue. The swaps are par swaps. For deep discount bonds par swaps have a value compared to swapping the net proceeds. For the domestic issues the value has on average been 3 bp p.a. Source: Great Belt. 27

26 Table 16. Great Belt Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Jan Gudme Raaschou Jan 21 GBP EIB + swap to USD Libor bp 569 Feb 6 3) JPY 1, ) 2011 Nomura + swap to USD Libor -24 bp 67 Feb 18 GBP EIB + swap to USD Libor -20 bp 1,136 Feb 18 GBP EIB + swap to USD Libor bp 622 Mar 23 USD Libor 2004 EIB Libor -17 bp -17 bp 1,045 Mar 23 *) Unibank + swap Cibor -20 bp 100 Mar 26 3)5) DEM Credit Suisse + swap Libor base 6) 381 Total... 4,015 Transactions with closing/settlement between January 1 and March Exchange rates as of settlement date. 3) Issued under Great Belt's EMTN-programme. 4) Structured. 5) With call options after year 3. 6) The first 3 years Libor -25 bp. The following 12 years Libor -30 bp. Swap counterparty has call options after year 3. *) Domestic issue. The swaps are par swaps. For deep discount bonds, par swaps have a value compared to swapping the net proceeds. For the domestic issues the value has on average been 3 bp p.a. Source: Great Belt A/S. 28

27 Table 17. Great Belt Swaps Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million Jan Cibor -21 bp Feb 6 FRF Pibor -35 bp FRF Feb 6 FRF 95.8 Pibor -40 bp FRF Mar Cibor -10 bp FRF Apr 3 USD 25.8 Libor bp CHF 37.0 Libor bp Apr Cibor -30 bp FRF Apr 16 USD 30.0 Libor -28 bp CHF 44.0 Libor bp May 22 USD 99.7 Libor -25 bp CHF Libor bp Jun Cibor -33 bp Jul Cibor bp Jul 22 USD 44.0 Libor -25 bp Jul Cibor -17 bp CHF 58.3 Libor bp Jul Cibor -18 bp CHF 58.8 Libor bp Jul 23 3) Cibor -20 bp Aug Cibor -29 bp FRF Sep 5 USD 56.0 Libor bp FRF Sep 17 DEM 61.2 Libor -15 bp DEM Sep 17 USD 15.4 Libor -20 bp Sep Cibor bp Oct Cibor -8 bp Oct 20 USD 65.6 Libor -24 bp FRF Pibor bp Nov 14 USD 35.9 Libor -25 bp DEM 62.2 Libor bp Dec 3 USD 54.9 Libor bp FRF Dec Cibor -33 bp Dec 12 USD 23.0 Libor -15 bp Total... 7,529 Including swaps linked to specific issues but not accepted in connection therewith. Exchange rates as of start date. 3) Structured. Source: Great Belt A/S. 29

28 Table 18. Great Belt Swaps Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million Jan Cibor -38 bp Jan Cibor -36 bp Jan Cibor -35 bp Jan 15 USD 60.0 Libor -34 bp Cibor bp Jan 20 USD 90.0 Libor -34 bp FRF Pibor bp Jan Cibor -33 bp Jan Cibor -22 bp Feb Cibor -14 bp Feb Cibor -14 bp Feb Cibor -22 bp Feb 23 USD 81.0 Libor bp 3) Feb 27 USD 10.0 Libor -24 bp Mar 5 USD 80.0 Libor -20 bp Mar 12 USD Libor -30 bp DEM Libor bp Mar 23 USD 19.0 Libor -28 bp Total... 5,401 Including swaps linked to specefic issues but not accepted in connection therewith. Transactions with closing/settlement between January 1 and March Exchange rates as of start date. 3) Structured. Source: Great Belt A/S. 30

29 Table 19. A/S Øresundsforbindelsen Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Jan 7 *) Gudme Raaschou + swap to Cibor bp 266 Jan 8 *) Nykredit Bank + swap Cibor-30.5 bp 303 Jan 16 *) Gudme Raaschou + swap to USD Libor -32 bp 269 Feb 20 *) Nykredit Bank + swap to USD Libor -33 bp 480 Sep 22 *) Nykredit Bank + swap to Cibor -30 bp 45 Oct 10 *) Dresdner Bank + swap to Cibor -25 bp 100 Oct 13 *) Gudme Raaschou + swap to Cibor -27 bp 448 Nov 11 *) Nykredit Bank 75 Total... 1,986 Transactions with closing/settlement date in Exchange rates as of settlement date. *) Domestic issue. Source: A/S Øresundsforbindelsen. Table 20. A/S Øresundsforbindelsen Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Jan 6 *) Gudme Raaschou 50 Feb 4 *) Nykredit Bank 61 Mar 5 GBP EIB + swap to CHF Libor bp 284 Total Transactions with closing/settlement between January 1 and March Exchange rates as of settlement date. *) Domestic issue. Source: A/S Øresundsforbindelsen. 31

30 Table 21. A/S Øresundsforbindelsen Swaps Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million Jan Cibor DEM Libor bp Jan 16 USD 44.8 Libor -32 bp FRF Feb 20 USD 76.6 Libor -33 bp CHF Libor -28 bp Apr 4 CHF 40.0 Libor -28 bp CHF Apr 10 CHF CHF April 11 DEM DEM Libor May Cibor bp May Cibor bp May 29 CHF 73.0 Libor CHF 73.0 Libor-35.5 bp July 3 FRF Pibor bp FRF DEM Libor bp July 3 USD 23.0 Libor bp FRF Pibor bp July Cibor Cibor 3) Oct 28 DEM 36.2 Libor DEM Total... 3,367 Including swaps linked to specific issues but not accepted in connection therewith. Exchange rates as of start date. 3) Connected to cap. Source: A/S Øresundsforbindelsen. 32

31 Table 22. A/S Øresundsforbindelsen Swaps Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million Feb Cibor -27 bp CHF 94.2 Libor bp Mar 5 CHF 60.1 Libor CHF 60.1 Libor bp 3) Total Including swaps linked to specific issues but not accepted in connection therewith. The table is brought up to date as of March Exchange rates as of start date. 3) Libor in arrear swap. Source: A/S Øresundsforbindelsen. 33

32 Table 23. Øresundskonsortiet Borrowing Transactions 1997 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Dec 18 *) Enskilda Debt Capital swap Cibor -32 bp 167 Jan 15 *) Gudme Raaschou + swap to USD Libor -35 bp 300 Jan 22 *) SE Banken + swap Cibor bp 200 Jan 31 3) JPY 15, Morgan Stanley + swap to USD Libor -27 bp 611 Apr 10 3) USD ) 2000 Kokusai Securities + swap to USD Libor -37 bp 200 Aug 29 *) SE Banken + swap Cibor -35 bp 200 Sep 23 FRF Caisse d'epargne + swap Libor -23 bp 114 Oct 2 *) Gudme Raaschou + swap Cibor -30 bp 50 Nov 6 *) Gudme Raaschou 25 Nov 12 *) Gudme Raaschou 50 Dec 19 SEK ) 2008 SE Banken 280 Total... 2,197 Transactions with closing/settlement in Exchange rates as of settlement date. 3) Issued under Øresundskonsortiet's EMTN-programme. 4) JPY/USD dual currency note. 5) Price index swap. *) Domestic issue. Source: Øresundskonsortiet. 34

33 Table 24. Øresundskonsortiet Borrowing Transactions 1998 and Swaps Accepted in Connection Therewith. Acceptance date amount in million Coupon per cent Maturing year Lead Manager/Lender All-in, per cent p.a. amount in million Feb 6 *) Gudme Raaschou + swap Cibor -22 bp 50 Feb 16 SEK Svenska Handelsbanken + swap to FRF Feb 17 SEK Svenska Handelsbanken + swap to FRF Mar 5 GBP EIB + swap to USD Libor bp 1,190 Total... 1,583 Transactions with closing/settlement between January 1 and March Exchange rates as of settlement date. *) Domestic issue. Source: Øresundskonsortiet. 35

34 Table 25. Øresundskonsortiet Swaps Acceptance date Receiving Millions Interest Paying Millions Interest Maturing year amount in million Jan 15 USD 42.5 Libor -35 bp FRF Jan Cibor DEM-Libor bp 276 Feb 24 USD 50.0 Libor -27 bp SEK ) Mar 11 USD 48.0 Libor -27 bp JPY 5,846.4 Libor bp Mar 20 DEM Libor DEM Libor bp 4) Apr 4 CHF 80.4 Libor bp CHF Apr 11 DEM DEM 40.6 Libor -20 bp Apr 22 USD 78.8 Libor -37 bp CHF Libor -32 bp May 22 XEU FRF Libor bp May 29 CHF 23.0 Libor CHF 23.0 Libor -35 bp 4) May 29 CHF 36.1 Libor CHF 36.1 Libor -35 bp 4) Jun 17 FRF Pibor FRF DEM Libor Jun 26 USD 18.5 Libor -27 bp FRF Pibor bp Jun 27 FRF Pibor bp FRF DEM Libor bp Jul Cibor -2 bp Jul 3 FRF Pibor -23 bp FRF DEM Libor bp Jul Cibor Cibor 5) Oct 28 DEM 29.8 Libor DEM Oct 28 DEM 32.1 Libor DEM Dec Cibor -21 bp ) Total... 4,703 Including swaps linked to specific issues but not accepted in connection therewith. Exchange rates as of start date. 3) Price index swap. 4) Libor in arrear swap. 5) Connected to cap. Source: Øresundskonsortiet. 36

35 Table 26. Øresundskonsortiet Swaps Acceptance date Receiving Millions Interest Millions Paying Interest Maturing year amount in million Mar 5 USD Libor bp CHF Libor bp Mar 5 CHF Libor CHF Libor bp 3) Total... 1,386 Including swaps linked to specific issues but not accepted in connection therewith. The table is brought up to date as of March Exchange rates as of start date. 3) Arrear swap. Source: Øresundskonsortiet. 37

36 Table 27. Economic indicators bn Current prices Percentage real growth Private consumption Public consumption Residential investment Public investment Business investment Stock building Total domestic demand... 1, Exports of which manufactures Imports GDP... 1, Memo: GDP, EU Percentage growth Consumer prices Hourly wage costs Per cent of GDP Current account of which interest Net foreign debt General government: budget balance of which interest Central goverment: budget balance 3) of which interest Employment: 1,000 persons Private sector... 1,760 1,757 1,796 1,814 1,853 Public sector Unemployment in per cent of labour force Contribution to GDP-growth. Cf. Table 29. 3) Current, investment and lending items, see also Table 28. Source: Statistics Denmark, Central government accounts and OECD. 38

37 Table 28. Central Government Finances Billion Revenue: Personal income taxes Social income taxes Value added tax Corporate tax Pension fund tax 3) Other Total revenue Expenditure: Unemployment benefits Social pensions 4) EU contribution Interest expenditure 5) Other Total expenditure Surplus 6) Funding: Bond purchases, net Redemption of domestic debt Foreign borrowing, net Other capital items Domestic borrowing Drawing on the central bank per cent from January Central/local government corporate tax rates, per cent: 33.4/4.6 or the rates 29.9/4.1 and a PAYE basis may be chosen. 3) 100 per cent of industry average yield over the inflation rate plus 3.5 per cent, maximum 56 per cent of the nominal yield for the institution in question. Yield includes capital gains. Certain investments are not subject to the tax. 4) The 1994-increase is largely technical reflecting increased inclusion in the tax base. 5) On foreign and domestic debt. 6) Current, investment and lending items. Source: Central Government Final Accounts and December 1997 estimate. 39

38 Table 29. Balance of Payments Billion Current account: Export of manufactures Agricultural exports Ships exports, net Other exports Energy imports, net Other imports Trade balance Services, net Interest, net Other transfers, net Total Capital flows, net: Portfolio Investments: Domestic government -bonds, etc Other Direct investments Business borrowing Local governments, etc. and individuals Decrease in the banks' external position 3) Estimate of unrecorded trade credits Errors and omissions Total financial surplus 4) Corresponding to: Central government borrowing abroad 5) Decrease in Denmark's international liquidity 3) Excluding ships. Including FEOGA export subsidies. 3) Excluding value adjustments, etc. 4) Including current account. 5) Including the Mortgage Bank until end 1996 and government lending to developing countries etc. Source: Current account: Statistics Denmark. Capital flows, etc.: Danmarks Nationalbank. 40