Finnish central government borrowing - May 2021 - Valtionvelka.fi
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Finnish central government borrowing May 2021
2
Credit ratings
AA+
The government has solicited credit
ratings from two credit rating agencies:
S&P Global Ratings and Fitch Ratings.
For long-term debt, they are
AA+ AA+ and AA+
(stable, stable)
17.5.2021 Finnish central government borrowing / May 20213
1 Finnish economy
Finnish central government borrowing / May 2021
17.5.20214
Growth will accelerate towards the end of 2021
• Growth will be substantially above 2020 2021 2022 2023
average towards the end of the year as
the pandemic is losing force GDP change % -2.8 2.6 2.5 1.5
• The global stimulus measures will Inflation, % 0.3 1.4 1.5 1.7
support Finland’s foreign trade Current account, %/GDP 0.3 0.1 0.4 0.5
• Signs of recovery in machinery and Private investment change, % -4.6 -1.0 4.8 4.2
equipment investments Exports change % -6.6 4.6 4.7 3.7
• General government deficit will persist Unemployment rate, % 7.8 7.8 7.2 6.9
in the coming years Public deficit, %/GDP -5.4 -4.7 -2.9 -2.2
Public debt, %/GDP 69.2 71.6 72.4 73.9
Source: Ministry of Finance, Spring 2021
17.5.2021 Finnish central government borrowing / May 20215
Exports recovering but contribution to growth
remains moderate
%
5
4
3
2
1
0
-1
-2
-3
-4
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* 2022** 2023**
Net exports Gross investments Other domestic demand GDP change
17.5.2021 Finnish central government borrowing / May 2021 Source: Ministry of Finance, Spring 20216 A moderate rise in consumer prices is expected change from previous year, % 17.5.2021 Finnish central government borrowing / May 2021
7
Current account in surplus at the end of the
outlook period
% of GDP
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
10 11 12 13 14 15 16 17 18 19 20** 21** 22** 23**
Current Account Balance of goods and services
17.5.2021 Finnish central government borrowing / May 2021 Source: Ministry of Finance, Spring 20218
Exports of goods well diversified
Exports by countries of destination in 2020 Exports by industries 2020
Baltics Manufacture of
5% UK transport
4% equipment
Euro area (exc.
Nordics (exc. 8% Forest industry
Germany, Baltics)
Sweden) Electric and 18%
19%
5% electronics
China industry
5% 8%
Russia Manufacture of
5% metal and metal
products
11% Wholesale and
Germany
Rest of the World retail trade
14%
7% 15%
Chemical industry
Rest of Europe 12%
8% Sweden Manufacture of
10% machinery and
USA equipment
9% Asia (exc. China) Other industries
9% 14%
14%
17.5.2021 Finnish central government borrowing / May 2021
Source: National Board of Customs 2/20219
Labour costs competitiveness improved
Hourly labour cost % change from previous year
4
3
2
1
0
-1
-2
-3
Euro area (19 countries) Finland
Source: Eurostat, May 2021
17.5.2021 Finnish central government borrowing / May 202150
70
90
110
130
150
170
190
210
230
17.5.2021
Mar-81
Mar-82
Mar-83
Mar-84
Mar-85
Mar-86
Mar-87
Mar-88
Mar-89
Mar-90
Mar-91
Mar-92
Mar-93
Housing prices relative to rents
Finnish central government borrowing / May 2021
Mar-94
Mar-95
Mar-96
Mar-97
Mar-98
Mar-99
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Relative housing prices in Finland
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Housing prices relative to wage and salary earnings
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Source: Bank of Finland, October 2020
1011
EMU general government financial balance
in ratio to GDP, %
4
2
0
-2
-4
-6
-8
-10
-12
-14
2018 2019 2020* 2021* 2022*
17.5.2021 Finnish central government borrowing / May 2021 Source: European Commission, Spring 202112
The public debt-to-GDP ratio in Finland is one of
the lowest in the euro area
EMU general government gross debt, % of GDP
250
200
150
100
50
0
2018 2019 2020* 2021* 2022*
17.5.2021 Finnish central government borrowing / May 2021 Source: European Commission, Spring 202113
Earnings-related pension assets including public
sector pension assets
% of GDP
100
93.4
88.5 89.7
90 85.6 86.7
83.4 83.4
79.4
80
73.4 74.4
68.7 68.8
70 66.2 65.4
62.1
60
54.1
50
40
30
20
10
0
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: Finnish Pension
17.5.2021 Finnish central government borrowing / May 2021 Alliance14
2 Funding
17.5.2021 Finnish central government borrowing / May 202115
Central government gross borrowing estimate
and projected funding instrument allocation
EUR bn EUR bn
40 40
35 35
30 30
25 25
20 20
15 15
10 10
5 5
0 0
2020 2021* 2022* 2023* 2024* 2025* 2026* 2020 2021* 2022* 2023* 2024* 2025* 2026*
Redemptions Net Borrowing Euro syndications Euro tap auctions RFGB PP EMTN T-bills
Sources: State Treasury, Ministry of Finance (*forecasts)
17.5.2021 Finnish central government borrowing / May 202116
Funding strategy
“Maintaining a globally diversified investor base by geography and investor type”
Benchmark bonds outstanding
• Euro benchmark bond curve to 30 years
€ million
• Three syndicated euro benchmark bonds per
7000
year complemented by tap auctions 6000
5000
• Liquidity in focus – Primary Dealers and 4000
3 inter-dealer platforms (MTS, BrokerTec, BGC 3000
2000
E-Speed)
1000
• EMTN issuance complements euro benchmark 0
bonds
By Maturing Year
17.5.2021 Finnish central government borrowing / May 202117 10-year government bond yield spreads to Germany 17.5.2021 Finnish central government borrowing / May 2021
18
Primary Dealers 2021
BofA Securities
Barclays
BNP Paribas
Citi
Crédit Agricole
Danske Bank
Deutsche Bank
Goldman Sachs
HSBC
J.P. Morgan
NatWest Markets
Nomura
Nordea
Société Générale
17.5.2021 Finnish central government borrowing / May 202119
Investor base for RFGB 0.00% EUR 3bn due September 2030
• Launched in August 2020
• Allocated to over 150 investors
Distribution of the bond by investor type Distribution of the bond by region
UK
Fund managers
4% 2% 4%
8% Benelux and France
16% Banks and bank 28%
33% treasuries 8%
Germany, Austria and
Central banks and official Switzerland
institutions Finland
Pensions funds and
17% insurance companies 17% Other Nordics
Hedge funds
Other Europe
18%
28% Other 17% North America
17.5.2021 Finnish central government borrowing / May 202120
Investor base for RFGB 0.125% EUR 3bn April 2052
• Launched in February 2021
• Allocated to over 130 investors
Distribution of the bond by investor type Distribution of the bond by region
3% 1% 1%
Banks 7%
United Kingdom
18% 8%
26% Benelux and France
Fund managers
35%
Italy
Hedge funds
12%
Nordics
Pension funds and insurance
companies Germany, Austria and
Switzerland
19% Central banks and official Other Europe
institutions
12%
Other 20% North and South America
Other
24% 14%
17.5.2021 Finnish central government borrowing / May 202121
Investor base for FINL 0.875% USD 1.5 bn due 2030
• Launched in May 2020
• Allocated to 87 investors
Central banks and official Asia
2% institutions 8%
7%
7% North and South
Banks and bank America
17% treasuries Benelux
9%
Pension funds and 45% Germany, Austria and
insurers
Switzerland
55% 6%
Fund managers Nordics
2%
Other Europe
19%
Other
23% UK
17.5.2021 Finnish central government borrowing / May 202122 Disclaimer NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES The information contained herein is not for publication or distribution, directly or indirectly, in or into the United States. These materials do not contain or constitute an offer of securities for sale, or the solicitation of an offer to purchase securities, in the United States. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act. The Issuer has not registered and does not intend to register any portion of the offering in the United States or to conduct a public offering of any securities in the United States. This presentation may include "forward-looking statements". Such statements contain the words "anticipate", "believe", "intend", "estimate", "expect", "will", "may", "project", "plan" and words of similar meaning. All statements included in this presentation other than statements of historical facts, including, without limitation, those regarding financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding present and future economic or fiscal strategies and the relevant future economic environment. These forward-looking statements speak only as of the date of this presentation and the State Treasury of Finland expressly disclaims to the fullest extent permitted by law any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Nothing in the foregoing is intended to or shall exclude any liability for, or remedy in respect of, fraudulent misrepresentation. This material has been prepared based upon information that the State Treasury believes to be reliable. However, the State Treasury does not represent that this material is accurate, complete and up to date and accepts no liability if it is not. Opinions expressed are current opinions only as of the date indicated. Any historical price(s) or value(s) are also of the date indicated. 17.5.2021 Finnish central government borrowing / May 2021
www.treasuryfinland.fi twitter.com/treasuryfinland Bloomberg: STF Reuters: SUVA Contact information: Visiting address: Sörnäisten rantatie 13, Helsinki Mailing address: P.O. BOX 14, FI-00054 STATE TREASURY, FINLAND Tel. +358 295 50 2000 (switchboard) e-mail: firstname.lastname@statetreasury.fi
You can also read
