Investors Presentation - June 2020 - Conselleria d'Hisenda i ...
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Investors Presentation
June 2020
1Economic outlook
The Valencian Community
Valencia Spain
Principado
de Asturias
23,255 505,990 Galicia Cantabria
Surface (km2)
4.6% 100% País Vasco
5.03 47.35 Navarra
Population Jan ’20 (m)
10.6% 100%
Castilla y León La Rioja
111 1,202
GDP 2018 (€ bn)
9.2% 100%
22,426 25,727 Aragón
Cataluña
GDP per capita 2018 (€) Madrid
87.2% 100%
Extremadura
Castilla -
La Mancha Comunidad
The Valencian Community was established in 1982 Valenciana
Located on the Eastern coast of Spain Andalucía
Baleares
Región
Mid–sized region that constitutes de Murcia
c. 5% of the national territory
It incorporates the provinces of Valencia,
Alicante and Castellon Ceuta Canarias
Melilla
Source: Instituto Nacional de Estadística (INE) 3The Valencian Community: Economic structure
GROSS VALUE ADDED (2018) Valencia has an open, dynamic and diversified
economy.
Construction
7%
Industry Services weighed 72% of the regional GDP in 2018
19%
– Tourism represents a high percentage of regional
GDP (14,6%)
Agriculture
2% – The industrial sector represented 19% of the
regional GDP in 2018.
– The industrial base includes automotive, food and
beverages, chemical, building materials and textile
companies
Services – The automotive industry represented 22% of
72%
regional exports ⇒ Ford’s plant is regarded as one
*
of the most efficient in Europe ( 2019).
EXPORTS
Highly-intensive in exports, compared to Spain.
Valencia Spain
– 27.5% of Valencia’s GDP (vs 23.7% in Spain)
– 10.74% of total exports in Spain. Along with
Exports / Imports (%)
109.35% 90.52% Madrid is the third Community more exporter only
March ’20 (last 12 months)
below Catalonia and Andalusia.
Exports (% of GDP)
27.5% 23.7% The Valencian Community holds a fundamental
2018 (full year)
strategic position for commercial interconnections.
*Exports of goods 4
Source: INE and Secretaría de Estado de ComercioThe Valencian Community: Economic structure
A strong industry sector:
The Valencian region is leader in Spain in the production of ceramic tiles. In 2018 represents for almost 94% of the
country’s production, and 9% of total exports in the region.
The region concentrates 62% of the footwear national production, 43% of footwear national exports and 9% of total
exports in the region.
Automotive industry production in the region represents in 2019, 15% of Spain’s total production, 15% of
automotive national exports too, and 22% of total exports in the region. It represents 12.9% of regional GDP.
Agrifood industry: It accounts in 2018 for almost 8% of the total national production ,13% of national agrifood
exports and 20% of total exports in the region).
Chemical industry. In 2018 represents 8% of the total output ,10% of national exports and 11% of regional GDP
Highly competitive services:
Valencia’s port is the leading commercial port on the West Mediterranean in terms of containerised cargo volumes
9.6 million of foreign tourists visited the region in 2019 (+4% yoy).
Services. Gross Value Added by activity. 2018 €m % of Spain
Trade and repair. Transportation, hotels and storage. 24,653 9.5%
Information and communications 2,021 5.0%
Financial and insurance activities 3,613 8.2%
Real estate activities 12,684 10.1%
Professional, scientific and technical activities 7,083 7.3%
Public Administration and defence. Compulsory S. Security. Education. Human
17,217 8.8 %
health and social work activities
Artistic, recreation and entertainment services 4,973 9,5%
Total services 72,244 9.5%
Source: Conselleria de Economía Sostenible, Sectores Productivos, Comercio y Trabajo, INE and Secretaría de Estado de Comercio
5The Valencian Community
Solid GDP growth rate
GDP GROWTH (yoy, %)
%
8%
6%
4.1% 3.8%
3.7% 3.6% 3.4%
3.1%
4% 3.0%
4.1% 2.2% 2.4%
3.5% 3.7%
3.0%
2% 3.3%
0.9% 2.6% 2.9%
0.2% 1.9%
0% -0.8% 1.4%
0.6% -1.3%
-0.3%
-2% -3.0% -1.4%
-3.8% -1.7%
-4%
-4.0%
-6%
-5.8%
Spain Valencia
-8%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: INE 6The Valencian Community: Weaknesses
Key macro figures below than national average
GDP per capita: 12.8 pp gap as of 2018 (Spain: 100 vs Valencia: 87.2).
Imbalances in the current regional financing system…
It has led to continuous deviations in the deficit target.
Uncertainty about the final outcome of the reform of the regional financing model,
after the committee of experts report. The central government has announced a draft for next
November
… which partly led Valencia to be the region with the highest relative regional
indebtedness
In 1Q20, debt to GDP represented 42.2% of Valencia’s GDP (vs 24.1% for the average of
Spanish regions).
Brexit: higher exposure to UK relative to other Spanish regions
Political uncertainty in Spain
Parliamentary fragmentation.
Global economic shock.
Uncertainty about the intensity and duration of COVID-19 outbreak. The Eur 1.4bn non-
refundable fund from Central Government would soften the negative impact of COVID-19
Source: INE, Conselleria de Hacienda y Modelo Económico and BBVA Research 7The Valencian Community in figures: Unemployment
Reduction and finally reversion of the gap between Spanish and Valencian
unemployment rate
From 1.9% (average 2012-2014) to 0.6% (average 2015-1Q2020).Current gap: -0.02%
UNEMPLOYMENT RATE (Quartely, %)
Average Gap 2012- 2014 Average Gap 2015-1Q2020
% +1.9% +0.6%
30% 28.73%
28.04%
26.83%
26.94% 24.28%
25% 25.93%
24.19% 21.84%
23.78%
19.77%
20% 21.00%
17.13%
18.75%
14.70%
16.74% 14.41%
15%
14.11% 14.39%
Spain Valencia
10%
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
Source: INE 8The Valencian Community in figures: Exports
Exports have increased by 54% since 2011, significantly above data for the whole
country
EXPORTS OF GOODS (Index, 2011 = 100)
Source: Ministerio de Industria, Comercio y Turismo and Conselleria de Hacienda y Modelo Económico 9The Valencian Community in figures: Tourism
2019 set a historical record in No. of tourists, both in Spain and Valencia (83.7 m and
9.6 m)
Valencian Community is ranked in the top 5 destinations in Spain
TOURISTS (Index , 2011 = 100) GUESTS IN HOTELS (Index, 2011 = 100)
Index (2011 = 100) Index (2011 = 100)
179
180 172 180
Foreign guests in Spain
167
Foreign guests in Valencia
160 160 Domestic guests in Spain
145 Domestic guests in Valencia
149
140 146 147 140
123 134
117
120 112 120
121
116
100 100
100 108 100
100 102
80 Spain Valencia 80
Source: INE 10Fiscal targets and budget
Fiscal targets
National and Regional deficit
BUDGET BALANCE (% of GDP)
% of GDP
2%
0%
-0.79% -0.20%*
-1.41%
-2% -1.55% -1.91%
-1.80%
-2.25%
-2.66% -2.66% -2.53%
-2.98% -2.82%
-4%
-3.89% -4.09%
-4.70%
-4.99% -5.13%
-6%
-5.78%
-6.71%
-7.02%
-8%
-10% -9.60% -9.41%
Total Spain Valencia
-12%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (A) 2020 (T)
Total Spain Deficit excludes support to the financial sector .* Global target pending distribution between CCAA. 12
Source: Ministerio de HaciendaBudget outturn: Revenues
Revenues Var. 2019/2018 Var. 2019/2012
2012 2013 2014 2015 2016 2017 2018 2019
(€ m) €m % €m %
Direct taxes 3,917 2,949 2,956 3,069 3,496 4,394 4,499 4,557 58 1% 640 16%
Indirect taxes 6,329 5,131 5,504 5,610 6,160 6,625 6,938 6,897 -41 -1% 568 9%
Fees, sales & other
631 569 596 677 857 685 765 1,048 283 37% 417 66%
revenues
Current transfers -487 1,869 1,201 1,106 1,262 1,210 1,159 1,355 196 17% 1,842 378%
Property incomes 9 9 42 6 3 8 7 5 -2 -29% -4 -44%
Current revenues 10,399 10.527 10,299 10,468 11,778 12,922 13,368 13,862 494 4% 3,463 33%
Disposal of real
1 1 57 0 0 1 0 0 0 -100% -1 -100%
investments
Capital transfers 204 248 139 103 235 88 101 277 176 15% 73 36%
Capital revenues 205 249 196 103 235 89 101 277 176 174% 72 35%
Non-financial
10,604 10,776 10,495 10,571 12,013 13,011 13,469 14,139 670 4% 3,535 33%
revenues
Source: Ministerio de Hacienda and Conselleria de Hacienda y Modelo Económico 13Budget outturn: Expenditure
Expenditure Var. 2019/2018 Var. 2019/2012
2012 2013 2014 2015 2016 2017 2018 2019
(€ m) €m % €m %
Personnel expenses 4,647 4,750 4,900 5,222 5,342 5.438 5,795 6,190 395 7% 1,543 33%
Purchase goods &
4,523 3,207 3,897 4,024 3,463 3.457 3,636 3,663 27 1% -860 -19%
services
Financial expenses 957 1,184 1,229 658 351 467 458 625 167 36% -332 -35%
Current transfers 3,519 3,327 3,098 3,627 3,854 4.265 4,693 5,073 380 8% 1,554 44%
Current expenditure 13,646 12,468 13,124 13,531 13,010 13.627 14,582 15,551 969 7% 1,905 14%
Real investment 512 370 410 352 301 369 391 437 46 12% -75 -15%
Capital transfers 870 822 830 431 269 418 397 498 101 25% -372 -43%
Capital expenditure 1,382 1,192 1,240 783 570 787 788 935 147 19% -447 -32%
Non financial
15,028 13,660 14,364 14,314 13,580 14.414 15,370 16,486 1,116 7% 1,458 10%
expenditure
Source: Ministerio de Hacienda and Conselleria de Hacienda y Modelo Económico 14Budget result in 2019
During 2019 current revenues have grown by 4%
Boosted by the increase in Current Transfers 17% (€ 196 m).
Fees, sales & other revenues increase by 19% (€ 143 m) (*).
Direct tax increase by 1% (€ 58 m) and Indirect Taxes decrease 1% (€ 41) due to the change
of VAT's settlement.
Current expenditure has increased by 7%
Current transfers increase by 8% (€ 380 m).
Personnel expenses increase by 7% (€ 395 m).
Financial expenses increases by 6% (€27) (*).
The 2012 -2019 budget figures evolution shows
Sustained improvement of the current balance over the period 2012 – 2018. From € -3,247
million to € -1,214 million. But in 2019 it has worsened to € -1,689
2019 ESA’s Deficit-to-GDP deficit 1.91% is very far from the target of 0.1%
If around € 1.000 million underfunding in the regional financing system would have been
corrected the ratio would have been reduced to 0.9% .
(*) Excluded one-off impact of € 140 m, compensated in both sides, revenues and expenditure. 15Budget: Breakdown by type
REVENUES
Capital Property
transfers incomes
2.0% 0.0%
Current
transfers
Direct taxes
9.6%
32.2%
Modifiable
Non Tax
Modifiable 60.0%
Fees, sales & Tax
other revenues 40.0%
7.4%
Indirect taxes
48.8%
EXPENDITURES
Capital
Real investment expenditure
Capital 2.7% 5.7%
transfers
3.0% Personnel
expenses
37.5%
Current
transfers
30.8%
Purchase goods &
services
22.2% Current
Financial expenses expenditure
3.8% 94.3%
Source: Ministerio de Hacienda and Conselleria de Hacienda y Modelo Económico 16Analysis of the region’s expenditures and revenues
The Valencian Region public spending has been below the average Spanish regions…
Regional Public Expenditure. Average 2003-2019(€ per inhabitant )
Navarra 4,601
País Vasco 4,291
Cantabria 4,032
Extremadura 3,797
La Rioja 3,746
Cataluña 3,695
Asturias 3,661
Aragón 3,574
Castilla y León 3,493
Galicia 3,462
Average Regions 3,381
Castilla-La Mancha 3,353
Gap 2003-2019
Avge. Regions Common Regime 3,318
-€210(-6%)
Murcia 3,228
Valencia 3,171
Andalucía 3,085
Baleares 3,078
Madrid 3,040
Canarias 2,988
0 1,000 2,000 3,000 4,000 5,000 6,000
Source: FEDEA, ‘Las finanzas autonómicas en 2019 y entre 2003 y 2019, by Ángel de la Fuente . 17
Conselleria de Hacienda y Modelo Económico.Analysis of the region’s expenditures and revenues
… and also in 2019
Regional Public Expenditure. 2019(€ per inhabitant )
Navarra 4,827
País Vasco 4,711
Cantabria 4,134
Extremadura 3,977
La Rioja 3,899
Asturias 3,823
Aragón 3,771
Cataluña 3,762
Castilla y León 3,630
Galicia 3,562
Average Regions 3,483
Avge. Regions Common Regime 3,401
Gap 2019
Murcia 3,399 -€99 (-3%)
Castilla-La Mancha 3,384
Valencia 3,384
Baleares 3,276
Madrid 3,151
Canarias 3,063
Andalucía 3,022
0 1,000 2,000 3,000 4,000 5,000 6,000
Source: FEDEA, ‘Las finanzas autonómicas en 2019 y entre 2003 y 2019’, by Ángel de la Fuente.
Conselleria de Hacienda y Modelo Económico 18Analysis of the region’s expenditures and revenues
Valencian Region has been the worst financed during the period 2002-2017
Adjusted financing per-capita post equalization transfers. Average 2002- 2017(Spain = 100)
Gap 2002-2017
7,5%
19
Source: FEDEA, La evolución de la financiación de las CCAA de régimen común 2002-2016’, and La liquidación del 2017 del Sistema de financiación de las
CCAA de regimen común ; by Ángel de la Fuente
Conselleria de Hacienda y Modelo Económico.Analysis of the region’s expenditures and revenues
… and it has been also the worst financed in 2017
Adjusted financing per-capita post equalisation transfers. 2017(Spain = 100)
Gap 2017
7.8%
Source: FEDEA, ‘La liquidación del 2017 del Sistema de financiación de las CCAA de regimen común ’, by Ángel de la Fuente. 20Institutional Framework
Institutional Framework
Spain has been a Quasi-federal State since 1978
The Spanish Government Administration has the following levels:
1)Central Government
2)17 autonomous communities
AUTONOMOUS COMMUNITIES
3)50 provinces Public expenditure by areas (2018)
4)and 8,000 plus municipalities
The autonomous communities are mainly
responsible for:
Healthcare
Education and Universities
Environment
Infrastructures
Social Services
Employment
Economic Activities
Public expenditure at the autonomous community level represents around 36% of total Spanish
public expenditure
Source: Ministerio de Hacienda. Data of 2018 regarding to National Accounts. 22Responsibilities of the European Regions
Spain Germany Austria Belgium Italy France
Ordinary Special
Status Status
Education (second.)
Healthcare (p) (p)
Transport
Economy
Justice
Universities
Police
Infrastructures
Environment
Housing
Local entities
Culture
Tourism
Employment
Social Services
Source: Conselleria de Hacienda y Modelo Económico 23Supervision Framework
A. Regional debt sustainability and management
Debt is approved by the Valencian annual budget law
Issuance of long term debt must be authorized by the central government’s Consejo de Ministros
Stability and Budgetary General Law
Autonomous Communities Financial Law (LOFCA):
Debt burden can not exceed 25% of operative revenues ⇒ The rule does not apply until 2020.
Funds must be spent on financing public works (real investments) ⇒ The rule does not apply until 2020.
B. Institutional support from the central administration
1. Revenues
Equalisation of the 75% regional taxes through the Guarantee of Basic Public Services Fund (GBPSF), according to
adjusted population
Revenues are less dependant from regional economic cycle
The model penalises the tax rate reduction policies
Global Sufficiency Fund (GSF) is an additional equalisation fund. Ensures that under the new financing frameworks
no CC.AA.’s can receive less funds – status quo-; Competitivity Fund is used to reduce the deviation of financing per
capita; Cooperation Fund for Autonomous Communities where the level of GDP per capita is lower than average
2. Expenditure
Increasing annual population is updated yearly for increasing the public resources
Central Government guarantees a minimum level of provision of public services (healthcare, education and social
services) by law (Art. 15 LOFCA)
Central Government ensures that CC.AA.’s resources are enough for its responsibilities
24Financing System for Spanish Regions
Revenues
Full responsibility (‘cupo’ system): Basque Country and Navarre
The remaining Autonomous Communities have partial substantial responsibilities on revenues:
– 50% Income Tax
– 50% Value Added Tax (VAT)
– 58% Special Taxes (alcohol, tobacco and gasoline)
– 100% Electricity Taxes
– 100% Inheritance Tax
– 100% Stamp Duty
– 100% Gambling Tax
– Other Taxes and Duties
25Financing System for Spanish Regions
Regional
resources For each region Non-Socialised Funding
Income tax 50%
25%
VAT 50%
Guarantee Fund for
Fundamental Services Socialised Funding:
State taxes 58%
(education, health and
social services) Divided amongst regions
Electricity 100% 75% according to their adjusted
75% of population which takes into
Property 100% regions’ revenues account the dependency
transfer tax + ratios.
State transfers
Stamp duty
Inheritance
tax
Average contribution = 8%
of regional financing.
Competitivity Fund
Convergence Funds
Central State Cooperation Fund
Resources
Sufficiency Funds
Current financing system should have been reviewed in 2014
Source: AFI and Ministerio de Hacienda 26National legal framework
Spanish Constitution reform: New debt ceiling and stability budget principle law
Approved by almost absolute majority of the Parliament, it sets both debt and deficit limits for all
government levels, including regional and local
Art. 135: ‘Financial burden payments are priority’ ⇒ Interest and public debt payments have
priority over any other expenditure
It came into force on 27th Sep 2011
Spanish Law on Budgetary and Financial Sustainability of Public Administration
It leaves no room for doubt: fiscal consolidation is a must
Implements Article 135 of the Spanish Constitution
Key Points
Structural Balance 0%. Exceptions must be approved by a majority in Parliament
60% of GDP or EU target: 44% for central government, 13% for regional government
Public Debt
and 3% for local authorities
These limits will not come into force until 2020 (for all public administrations)
Application
Until then, there will be a phase-in period
Medium term GDP growth reference rate
Expenditure Rule
(according to EC methodology and published in an economic situation report)
Budgets Budgetary framework medium term (minimum 3 years)
27National legal framework
Reforms are quite in line with other carried out by our European peers
German legislation states that revenues and expenditure must be balanced, in principle, without
recourse to credit, but this rule is applied differently to the Federal Government and the Landers
Spanish constitution German constitution
Central government Max. structural deficit: 0.26% of GDP Max. structural deficit: 0.35% of GDP
Zero deficit
Regional government Max. structural deficit: 0.14% of GDP
Debt can only be taken on for amortization
Natural disasters, recession or extraordinary Natural disasters, recession or extraordinary
emergency situations beyond the State emergency situations which considerably
Exceptions to the control worsen the State’s financial situation
limits
Exceptions must be approved by a majority in Requires a majority motion from the
Parliament members of the Bundestag
Law already in force for the central
Limits will not come into force until 2020 government (since 1st Jan 2016)
Application
for all public administrations For Landers it will be applied from 1st Jan
2020
Potential access to aid for fiscal consolidation
Special aid to regions
for five regions in exchange of their
with difficulties in For the time being, no such aid is forecasted
commitment to meeting certain targets
fiscal consolidation
during the transitional period
Source: BBVA Research 28National legal framework
Under the following framework, Central Government guarantees regional budgetary and
debt discipline
Fiscal objectives established by Central Government
Regional Economic and Financial Plans (EFP) to be approved by
Preventive Central government
Mechanisms
Budgetary and debt control
Non compliance risk warning: 1 month to adopt new measures
Automatic corrective measures
Authorization for all debt operations (long term only following EFP
Corrective approval)
Mechanisms Preliminary report from Ministry of Treasury for any subsidy or
agreements
Rebalancing Plans
Causes: No EFP submitted, not approved, no compliance EFP
Measures:
Enforcement
Measures 15 day adoption of a plan to cut expenditure
Possible exercise of regulatory authority on taxes granted by central
government
29Financial Situation
Generalitat Valenciana: Ratings
RATINGS
Long Term Short Term
Moody’s (Feb’20) Ba1 (Stable outlook) NP
S&P (May’20) BB (Stable outlook) B
Fitch (Apr’20) BBB- (Stable outlook) F3
OTHER FEATURES
Management through a special agency until August 2018⇒ Institut Valencià de Finances. After Decree
119/2018, debt management falls under the “Conselleria de Hacienda y Modelo Económico” responsibility.
Funding until 2011 was done in international capital markets ⇒ EMTN and ECP
Since Dec’15 the EUR marketable debt instruments issued by regional and local governments located in the
Euro area have been eligible for regular PSPP purchases (no primary purchases), as long as they meet
the other conditions of eligibility, including a minimum rating
Spanish regions enjoy the same regulatory treatment as sovereigns for banks and insurance
companies:
0% risk weighted and Level 1 LCR (0% haircut) for banks under Basel III and CRD IV
0% capital charges for insurance companies under Solvency II
Also eligible under Eurosystem haircut category II, similar to that supranational debt
.
31Generalitat Valenciana: Total Debt (ESA 2010)
MAIN FIGURES (1Q20) BREAKDOWN BY TYPE
Bonds
DEBT DISTRIBUTION €m PPP
1% Short Term loans
1%
LT Loans 2%
General Administration 46,955 (Financial
Entities)
Other entities included in the 12%
1,203
Public Administration Sector
LT Loans (Central
Total debt (1Q20) 48,158 Gvt' Mechanisms)
84%
Debt / GDP (1Q20) 42.2%
Source: Banco de España 32Funding Support Mechanisms from Central Government
Regional Liquidity Fund (FLA)
Since 2012, it has guaranteed financial aid until Autonomous Regions regain access to financial markets
It has been replaced by the Fund for the Financing of Spanish Regions (FFSR)
Fund for the Financing of Spanish Regions (FFSR)
Created by RD 17/2014, it centralises all liquidity support from central government to regions
Intention of central government to recentralise the funding of Spanish regions and increase the monitoring.
There is no ‘temporary’ mention in the definition, reinforcing the idea of permanence
4 different layouts:
Target: previous non-FLA regions and current FLA regions which fulfil the goals of
FINANCIAL budget stability, public debt and average payment period to suppliers
FACILITY
Non ex-ante rebalancing plan is requested
LIQUIDITY Target: regions which do not meet the condition on average payment period to
FUND suppliers
SOCIAL Optional format that allowed Spanish regions to refinance their pending debt with
FUND municipalities up to 31 December 2014
SUPPLIER Same purpose as the previous one
PAYMENTS
Legally terminated from 1 January 2015
FUND
33Funding Support Mechanisms from Central Government
Fund for the Financing of Spanish Regions (FFSR)
The Financing Facility and the Liquidity Fund have similar funding goals
Cash requirements due to:
i) Bonds maturities
ii) Long Term Loans maturities
Funding needs derived from regional deficits
The 2008/2009 financing System negative liquidation repayments
Other financial operations approved by the central government
Spanish regions are returning progressively to markets. CDGAE has authorized the return to the market of
those regions that are under the Financial Facility Fund.
Pros:
Liquidity and funding support to regions during critical episodes
Extremely low financing costs
Reduction in the average payment time to suppliers
Cons:
i) Loss of financial autonomy
ii) Loss of access to capital markets
Source: BBVA Research and Conselleria de Hacienda y Modelo Económico 34Funding Support Mechanisms from Central Government
Several mechanisms have been instrumented since 2012…
FLA and Social Fund Suppliers Payment Fund
Disbursed Cost Outstanding Disbursed Cost Outstanding
2012 3,830 5.130% 1,527 4,351 Euribor 3 m +525 pb 1,581
70 Euribor 3 m +395 pb 35
2013 3,119 3.820% 1,170
931 3.34% 266
2014 6,057 2.097% 3,786 2,221 3.34% 1,110
2015 8,760 0.834% 5,475
2016 6,968 0.475% 5,226
2017 5,409 0.840% 5,409
2018 5,828 0.861% 5,828
2019 6,783 0.511% 6,783
2020 3,179 0.320% 3,179
Total 49,933 38,383 7,573 2,992
TOTAL OUTSTANDING 41,375
All mechanisms improved in 2015 their financial conditions to 0.834%
Estimated 2020 FLA loan amount: € 8,441 m.
Data for cost stand for interest rate initial conditions. Data in € m and % 35
Source: Conselleria de Hacienda y Modelo Económico, as of 31 May 2020Funding Support Mechanisms from Central Government
Significant cost savings thanks to the central government strong support
ESTIMATION OF SAVINGS
€m 2014 (A) 2015 (A) 2016 (A) 2017 (A) 2018 (A) 2019 (A*) 2020 (B)
Financial expenses 1,229 658 351 467 458 485 485
Savings related to
- 571 878 762 771 744 744
2014
(A) Actual / (B) Budget / (A*) Excluded one-off impact of € 140 m 36
Source: Conselleria de Hacienda y Modelo EconómicoDebt Market Approach and Financing
FUNDING STRATEGY (General Administration)
€m 2020 2021 2022
Redemptions (Securities and Long term loans) 5,844.4 6,551.5 7,114.5
Net Issuance Medium–Long term* 2,407.8 210.4 91.2
Gross Issuance Medium-Long Term 8,252.2 6,761.9 7,205.7
*Net Issuance Medium-Long term, includes target deficit 0,2% GDP approved by the Central Government, deviation deficit 2019 and and the
2008-2009 regional financing system negative liquidation. 37
Source: Conselleria de Hacienda y Modelo Económico, as of 31 December 2019Debt Market Approach and Financing
Improvement in current Debt Maturity profile thanks to the Central Government funding
support
GENERALITAT VALENCIANA DEBT: MATURITY PROFILE (General Administration)
€m
8,000
7,229 7,115
7,000 6,552 6,631
6,000
5,454
5,000 4,521
4,000 3,468
3,000 2,588
2,000 1,811
1,084
1,000
406
98
0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 +2030
Source: Conselleria de Hacienda y Modelo Económico, as of 31 December 2019 38Debt Cost and Debt Average Life
Reduction in Debt cost
GENERALITAT VALENCIANA: COST AND AVERAGE LIFE DEBT
% / years
6
5.12
5 4.58 4.70
4.37 4.45
4.11 4.21 4.21
3.88 4.02 3.98
3.87 3.91
4
4.09
3.65 3.73 3.75 3.76 3.62
3 3.30 3.22
2 2.39
0.80 0.96 0.96 0.92 0.88 0.80
1
Debt Cost (%) Average life (years)
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q2020
Source: Conselleria de Hacienda y Modelo Económico 39Secondary Market Spread
Since 2012, secondary spreads of Valencian debt have decreased sharply
SECONDARY MARKET SPREAD ON SWAP (2001–2020)
*Data correspond to monthly averages. 40
Source: Bloomberg and Conselleria de Hacienda y Modelo EconómicoDisclaimer
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