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Investerarpresentation Tokyo 7-8 maj 2012
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Investerarpresentation Tokyo 7-8 maj 2012

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Investerarpresentation Tokyo 7-8 maj 2012 Investerarpresentation Tokyo 7-8 maj 2012 Presentation Transcript

  • 2 2012-05-07 Investor presentation
  • Kingdom of Sweden Swedish National Debt Office STRONG CREDIT OUTSIDE EUROLAND Bo Lundgren, Director General Tokyo, May, 20123 2012-05-07 Investor presentation
  • Our assignments We are a public authority responsible to the Ministry of Finance. The Government appoints our board and our Director General. The Debt Office was established in 1789. •  Providing banking services for the central government •  Raising loans and managing central government debt both in the institutional and the retail market •  Providing state guarantees and loans •  Being responsible for the deposit insurance and investor protection schemes •  Managing government support for banks.4 2012-05-07 Investor presentation
  • Objective of our debt management The overall objective of the Debt Office is to minimize the long-term costs of central government financial management without taking excessive risks. Our work helps to ensure that taxpayers’ money is used as efficiently as possible and that the financial system remains stable.5 2012-05-07 Investor presentation
  • 6 2012-05-07 Investor presentation
  • Swedish debt in brief7 2012-05-07 Investor presentation
  • A safe haven for government bonds •  Government finances among the strongest in the world and will remain so •  Growth one of the strongest in Europe 2009 and 2010. For 2012 and 2013 we assess a growth of around 1 and 3 per cent respectively •  Debt to GDP close to 30 per cent •  Budget will remain in surplus in spite of the more gloomy global outlook •  Dollar and euro bonds issued, but only for on-lending to the central bank’s foreign exchange reserve •  New investors continuously entering the Swedish government bond market •  Effects of future regulations uncertain but could likely increase bank demand for bonds8 2012-05-07 Investor presentation
  • A safe haven for government bonds cont’ •  Liquidity in the government bond market is extraordinary compared to its size •  Open market even during the crisis •  Liquidity is supported by the Debt Office security lending commitment (repo facility) •  The Debt Office gives priority to bonds over other instruments to support liquidity •  The Swedish currency is among the top 10 most traded •  So far the krona has been surprisingly strong compared with historical turbulences •  Gradual increase of longer bonds. A new 20 year bond was syndicated through a switch in March 20129 2012-05-07 Investor presentation
  • Governance of debt management •  The Debt Office decides inde- pendently on debt management policy and funding within yearly guidelines from the Government •  Guidelines are basically general and set targets for allocation of the debt between different debt classes and time to maturity for each class •  Guidelines are based on a proposal from the Debt Office •  Management and Guidelines are evaluated every second year by the Parliament10 2012-05-07 Investor presentation
  • Reforms to increase stability and growth Reforms on monetary and fiscal policy frameworks together with deregulations and pension reforms have created a stable economic and budgetary enviroment. •  Medium-term budgetary framework – Budgetary framework established in 1997 and strengthened in 2011 … – ...targeting an average surplus of 1 per cent of GDP for the general Government over the business cycle with close monitoring of spending ... – ... ceiling for government spending decided each year in advance by the Parliament •  The Swedish central bank – The Riksbank – has an independent standing with a price stability objective11 2012-05-07 Investor presentation
  • Reforms to increase stability and growth cont’ •  Pension reform established – Pensions now linked to life-long income – Defined contributions as a complement – The new system is robust to changes in overall income growth and demographics •  Deregulation of product markets – Telecom – Transportation – Electricity – Labour market reform12 2012-05-07 Investor presentation
  • Future financing projections In addition to our proposal for Guidelines for Central Government debt manage-ment, we presented an analysis on the implications of declining government debt: •  On liquiditiy, infrastructure and readiness to borrow in a crisis scenario •  Priorities between our different debt classes and instruments •  Funding in excess of our borrowing requirement to support market presence Despite weaker growth, the central government budget will largely be in balance in 2012 and 2013. No austerity packages needed and monetary policy can be adjusted to domestic conditions13 2012-05-07 Investor presentation
  • Funding plans •  Focus on 10 year nominal bonds to defend liquidity and infrastructure •  Gradual increase of long-dated bonds •  Issues in foreign currency to rollover on-lending to the central bank’s foreign exchange reserve •  Symbolic presence in the inflation-linked market •  T-bill borrowing increases somewhat within the liquidity management framework14 2012-05-07 Investor presentation
  • Debt around 30 per cent of GDP Central Government Debt SEK 1,143 bn at the close of 2012 or 32.8 per cent of GDP. Including on-lending to the central bank, the debt would be SEK 1,024 bn or some 29.4 per cent of GDP. SEK billion Per cent of GDP 1 400 60 1 300 50 1 200 40 1 100 30 1 000 20 900 10 800 0 Central Govt Debt Incl. assets Central Govt debt, % Incl. assets, %15 2012-05-07 Investor presentation
  • Debt portfolio structure, SEK mn •  Bonds are the core of our Government bonds 558,510 government debt, close to 80 % –  Government bonds 191,833 –  Inflation-linked bonds Public bonds, foreign currencies 108,593 –  Foreign currency bonds T-bills 83,066 •  T-bills are partly long-term funding Retail market 56,790 and partly liquidity management •  Commercial paper are used Collateral 30,129 occasionally as substitute to T-bills Liquidity management 24,477 •  Retail market debt, around 5 % Commercial paper 13,805 •  On-lending to boost the central Other capital market debt 4,219 bank foreign exchange reserve Foreign exchange derivatives –13,626 On-lending –91,349 00 0 0 0 0 0 0 0 00 00 00 00 00 00 ,0 0, 0, 0, 0, 0, 0, 00 10 20 30 40 50 60 –116 2012-05-07 Investor presentation
  • 172012-05-07 Investor presentation 10 46 5. 5% 0 20 40 60 80 100 10 8 SEK bn 55 1. O 5% ct 12 10 63.7 30 41 Au 6. 75 g 10 % 13 9.5 49 5 M 4. ay 5 % 14 Government bonds 82.8 12 10 Au 50 g 10 3% 15 60.5 51 12 3. 7 5% Ju l1 10 6 48.0 52 12 4. Au 2 5% g 17 52.5 12 10 M 47 ar 5% 19 65.8 10 1 54 D ec 3. 20 5% 56.3 10 56 1 Ju 2. 25 n 22 10 % 67.1 53 1 Ju 3. 5% n 32 11.0 30 M ar 3 9 41.3
  • Inflation-linked government bonds SEK bn 60 50.1 50 42.7 40 30.3 30 20.5 20 14.1 10 4.0 0 15 17 20 22 28 4 r1 ec n ec n ec Ap Ju Ju D D D 1 1 1 1 1 1 % % 0% 5% 5% 4% 5 25 0. 3. 3. 1 0. 02 0 7 05 04 30 8 0 31 0 31 31 31 3118 2012-05-07 Investor presentation
  • Foreign currency bonds 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 019 2012-05-07 Investor presentation
  • Maturity profile, capital market SEK bn 160 140 120 100 80 60 40 20 0 2012 2013 2014 2015 2016 2017 2019 2020 2022 2026 2028 2032 2039 Bonds in foreign currencies Government bonds20 2012-05-07 Investor presentation
  • Increased bond borrowing All borrowing, apart from on-lending in foreign currencies to the central bank, will be focused on nominal government bonds. SEK billion  2008  2009  2010  2011  2012  2013  Net borrowing requirement  ‐135  176  1  ‐68  11  ‐3  Discrepancy between business and payment date  ‐20  ‐20  25  11  ‐9  4  Retail market, collateral etc., net  ‐19  4  2  ‐9  3  7  Money market, redempBons  245  111  209  178  159  188  Capital market, redempBons, switches and buy‐backs  90  181  38  126  127  42  Gross borrowing requirement  161  452  275  238  291  238  Money market, gross borrowing  111  209  178  159  188  148  Capital market, gross borrowing  50  243  97  79  103  90       Government bonds  47  110  58  41  50  53       InflaBon‐linked bonds  3  3  8  6  6  6       Bonds in foreign currencies  0  130  31  31  47  32  Borrowing, gross  161  452  275  238  291  238  Note: 1 % of GDP is SEK 35 bn.21 2012-05-07 Investor presentation
  • Unchanged debt Debt will be more or less stable as Sweden will have a budget balance the upcoming two years. Debt is approaching 30 per cent. SEK billion  2008  2009  2010  2011  2012  2013  Net borrowing, business day = Change of debt, nominal amounts  ‐155  156  26  ‐56  2  1  A. Nominal amount including money market assets  976  1 131  1 157  1 101  1 103  1 104       InflaBon compensaBon  33  30  31  34  32  35       Exchange rate effects  30  0  ‐26  ‐19  ‐17  ‐16  B. Nominal amount to current exchange rate incl. inflaNon compensaNon           and money market assets  1 038  1 161  1 162  1 116  1 118  1 122       Money market assets  91  37  26  42  25  25  C. Central government debt  1 129  1 197  1 188  1 158  1 143  1 147       Money market assets  ‐91  ‐37  ‐26  ‐42  ‐25  ‐25       On‐lending  ‐94  ‐86  ‐91  ‐94  ‐95  D. Central government debt incl. on‐lending and money market assets  1 038  1 067  1 075  1 025  1 024  1 028  Nominal GDP  3 204  3 089  3 306  3 474  3 486  3 589  C. Central government debt, % of GDP  35,2  38,8  35,9  33,3  32,8  32,0  D. Central government debt incl. on‐lending and money market        assets, % of GDP  32,4  34,5  32,5  29,5  29,4  28,6 22 2012-05-07 Investor presentation
  • Investment case Sweden23 2012-05-07 Investor presentation
  • Strong public finances •  According to the OECD, the General Government net lending will be –0.6 per cent of GDP compared to –4.6 per cent average for the Euro Zone in 2011 •  Our own assessment of General Government net lending for 2011 is a surplus of 0.6 per cent of GDP or some SEK 20 bn. General Government debt will be around 35 per cent of GDP •  Medium-term budgetary framework –  … targeting an average surplus of 1per cent of GDP for the general Government over the business cycle and a ceiling for government spending decided each year in advance by the Parliament –  commitment from both the current government and the Social Democrats General Government Debt, % of GDP 2011 General Government Net Lending, % of GDP 201124 2012-05-07 Investor presentation
  • Broad investor base •  Around 40 % of government Percent 60 (nominal and inflation-linked) bonds are owned by foreign 50 investors 40 •  About 40 % of total government debt is owned by 30 foreign investors assuming that foreign currency debt is 20 owned solely by foreigners 10 •  The Kingdom of Sweden’s investor base has a core of 0 2006 2008 2010 2012 some 25 domestic investors, but is essentially international - T-bills, % comprising investors in UK, Euroland, Asia and US25 2012-05-07 Investor presentation
  • Swedish yields reflect scarcity and AAA quality •  Swedish government bonds Yield spreads to German 10-year bonds are benchmarks in the SEK Percent fixed income market 500 •  Sweden has its own currency 400 and central bank; gaining by the turbulence as a safe haven 300 •  Limited supply of bonds 200 advantageous for Swedish yields 100 •  In February 2012 our central bank cut the repo rate by 25 0 bp to 1.50 per cent. The –100 market expects the Riksbank Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May to continue lowering rates. 2007 2008 2009 2010 2011 201226 2012-05-07 Investor presentation
  • Unemployment rising and becoming entrenched The NIER assessment: •  “Through increased uncertainty GDP growth, quarterly figures, Sweden and weak exports, Sweden is being negatively affected by the government debt crisis in Europe. The year 2012 will thus be one of lackluster growth. Absence of progress toward solutions for the crisis-ridden countries of the euro area is unnecessarily delaying recovery. There will be lasting negative effects on the Swedish economy as well, partly from many years of high GDP growth, seasonally adjusted, q/q GDP growth, calendar adjusted, y/y unemployment.”27 2012-05-07 Investor presentation
  • Swedish exports – regional distribution Export is geografically concentrated to northen Europe – the economic strongholds. Norway 10% •  Our main export countries are All other countries 19% •  Norway Germany 10% •  Germany Brazil 1% •  UK Saudi Arabia 1% India 1% •  United States Turkey 1% Japan 1% United Kingdom 7% •  Denmark Australia 1% Russia 2% •  Finland Spain 2% Poland 3% United States 7% •  Netherlands Italy 3% •  France China 3% Denmark 7% •  … exports to these countries are Belgium 4% Finland 6% close to 60 per cent of the total France 5% Netherlands 5% •  Europe receives almost 70 per cent of our export28 2012-05-07 Investor presentation
  • Underlying inflation around 1 per cent The headline inflation is around 2 per cent and the underlying inflation measured with fixed interest rates is around 1 per cent. Swedish inflation29 2012-05-07 Investor presentation
  • Labour market •  Faster than expected reduction in unemployment until now, but could be leveling out going forward Unemployment Employment Percent Person, millions30 2012-05-07 Investor presentation
  • Surprisingly strong Krona during this turmoil •  A ”normal” exchange rate versus the euro has historically been 8.90-9.40 •  During global financial turbulence and lack of export demand, the krona typically weakens •  The tensions in the Euro area, strong budget outlook and signals of monetary tightening supports the krona •  Pick up in exports provides krona support •  SNDO reduces costs by taking positions in currencies. The SEK 50 billion position for a stronger krona vs. EURSEK USDSEK the Euro generated a profit of SEK 8 billion31 2012-05-07 Investor presentation
  • Business confidence Diffusion index Net balance32 2012-05-07 Investor presentation
  • Economic tendency indicator Summary of business and consumer economic sentiment Net balance33 2012-05-07 Investor presentation
  • Retail sales Retail sales, constant proces, 12 months change Percent 12,5 10,0 7,5 5,0 2,5 0 –2,5 –5,034 2012-05-07 Investor presentation
  • Consumer confidence Net balances35 2012-05-07 Investor presentation
  • Turnover in the Government bond market SEK bn •  Customer turnover in nominal bonds 45 average around SEK 30 bn per day 40 •  SEK 10 bn spot 35 •  Bond stock turned over 5 times a year 30 •  Around 50 per cent of spot turnover comes from foreign investors 25 •  Derivative trading (forwards) has 20 trended upwards 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Forward Spot36 2012-05-07 Investor presentation
  • Primary dealers •  Barclays Capital +44 207 773 8275 Nominal bonds •  Danske Markets +46 8 568 808 44 Nominal bonds, T-bills, Inflation-linked •  Handelsbanken Markets +46 8 463 46 50 Nominal bonds, T-bills, Inflation-linked •  Nordea +45 33 33 17 58 Nominal bonds, T-bills, Inflation-linked •  Nykredit Markets +46 8 557 67 400 Nominal bonds, T-bills, Inflation-linked •  RBS +46 8 506 198 76 Nominal bonds, T-bills, Inflation-linked •  SEB +46 8 506 231 51 Nominal bonds, T-bills, Inflation-linked •  Swedbank +46 8 700 99 00 Nominal bonds, T-bills, Inflation-linked37 2012-05-07 Investor presentation
  • Telephone: +46 8 613 45 00 E-mail: riksgalden@riksgalden.se Visitors address: Jakobsbergsgatan 13 Postal address: Riksgälden, SE-103 74 Stockholm, Sweden Web: www.riksgalden.se Debt Management: Thomas Olofsson, Head of Debt management Phone: +46 613 47 82, thomas.olofsson@riksgalden.se www.twitter.com/olofssonthomas Bo Lundgren Director General Maria Norström, Head of Funding Phone: +46 8 613 46 35, maria.norstrom@riksgalden.se Magdalena Belin, Head of Analysis Phone: +46 8 613 52 28, magdalena.belin@riksgalden.se Front office: + 46 8 613 47 80 or +46 8 613 47 9038 2012-05-07 Investor presentation
  • 39 2012-05-07 Investor presentation
  • The National Debt Office plays a key role in the Swedish economy and in the financial market. Our operations contribute towards taxpayers’ money being used as efficiently as possible and the financial system remaining stable. Visiting address: Jakobsbergsgatan 13 • Postal address: SE-103 74 Stockholm, Sweden Telephone: +46 8 613 45 00 • Fax: +46 8 21 21 63 • Email: riksgalden@riksgalden.se • www.riksgalden.se40 2012-05-07 Investor presentation