Data on holdings of marketable debt by non- residents in Table 1 and Table 5 are drawn from Australian Bureau of Statistics Catalogue No. 5302.0 and 5232.0. Data on holdings of marketable debt by residents in Table 5 are derived by subtracting non- residents' holdings from total marketable debt. Note that beyond June 1999 it is not possible to identify accurately non-resident holdings using this source.
The Treasurer has ministerial responsibility for the Australian Government's debt management operations and, in accordance with the relevant legislation, authorizes officers of the Australian Office of Financial Management (AOFM) to undertake certain of these responsibilities on his behalf. The AOFM was established on 1 July 1999 as a specialist agency within the Treasury portfolio. The AOFM is directly responsible to the Treasurer, through the Secretary to the Treasury, for all operational aspects of Australian Government debt management. Prior to 1 July 1999, these responsibilities lay with the Debt Management Office, which was a part of the Treasury.
The AOFM aims to manage Australian Government net debt at least cost over the medium-term, subject to an acceptable level of risk, and contribute to supporting financial market efficiency.
The AOFM conducts its debt management operations using a risk-based framework for analysis and reporting.
Treasury Notes are issued to cover mismatches between the Australian Government's outlay and revenue streams throughout the year. Treasury Notes are issued into maturity dates that are most efficient from a cash management perspective. The Notes are issued at a discount and redeemable at par on maturity. The "interest" payable on the Notes is represented by the difference between their issue value and their par or face value.
None.
None.
Treasury Fixed Coupon Bond is a medium to long-term security that carries a rate of interest fixed over the life of the security, payable on the face, or par, value of the security. The bonds are repayable at face value on maturity.
2.1.2.1.1 Short-term bonds
Treasury Fixed Coupon Bonds with a maturity of up to one year.
2.1.2.1.2 Medium-term bonds
Treasury Fixed Coupon Bonds with a maturity of one to five years.
2.1.2.1.3 Long-term bonds
Treasury Fixed Coupon Bonds with a maturity of more than five years.
Treasury Indexed Bond (TIB): This is a medium to long-term security issued in the form of a Capital Indexed Bond. The nominal value of the security, on which a fixed rate of interest applies, varies over time according to movements in the Consumer Price Index. At maturity, the adjusted capital value of the Bonds is paid. In the past, Treasury Indexed Bonds were also issued in the form of Interest Indexed Bonds. These bonds carry a nominal rate of interest, which varies over time according to movements in the Consumer Price Index, and are repayable at face value on maturity. Issuance of TIBs was suspended between February 2003 and September 2009.
Treasury Adjustable Rate Bond (TAB): This is a medium to long-term security that was issued between 1994 and 1997. The bonds carried an interest rate, which was adjusted quarterly in line with movements in bank bill rates, payable on the face value of the security. TABs were repayable at face value at maturity.
Loans taken over from the previous Pipeline Authority, Federal Airports Corporation, Australian National Railways and Snowy Mountains Hydroelectric Authority.
None.
Income Equalisation Deposits: A form of interest paying instrument that was available to Primary producers until end-1999. The deposits were repayable at the request of the depositor at any time after the expiration of 12 months from the date of deposit.
Overdues: Securities that have passed their maturity date but remain unpresented by stockholders. The Australian Government repays the stock when presented; but no further interest accrues on the stock following the maturity date.
All instruments are currently issued to the market via a tender process. Tenders are conducted by the AOFM using an internet based system. Bids for stock offered for sale may only be submitted by parties that are registered with the AOFM.
Acceptance of bids is made in ascending order of yield. Allotments are made at the yields bid, for Treasury Fixed Coupon Bonds and Treasury Notes. Tenders for the issue of Treasury Indexed Bonds are held on a single price basis.
Tender results are announced as soon as practicable after the close of bidding - generally within one minute.
Amounts reported are nominal values.
Amounts are reported on an Australian fiscal year basis. The Australian fiscal year ends on 30 June.
All data are actuals, no estimates have been included.
Residual maturity.
When calculating the duration, we include the outstanding stock of Treasury Indexed Bonds.
AOFM published numbers use a real interest rate shock for duration of Treasury Indexed Bonds (TIBs). From a duration perspective, this treatment results in TIBs being measured in the same fashion as fixed coupon bonds.
The Austrian Federal Financing Agency (AFFA) is the debt management office of the Republic of Austria and acts in the name and for the account of the sovereign. Its responsibilities include issuing Austrian government debt and managing the central government debt portfolio. The AFFA also acts as the central liquidity manager of the Republic of Austria.
Data are disseminated on the federal government debt which comprises more than 99 per cent of central government debt (excluding extra budgetary funds and the social security funds). The federal government debt (nominal value) includes cross currency swaps.
For further information please refer to AFFA's Web site: www.oebfa.at.
The data on federal debt published on the web site take into account holdings of own bonds which are deducted from the total debt amount.
Austrian Treasury Bills: discount instrument with maturities of 7 to 365 days, redeemable at par on maturity.
No issuance from 2000 to 2010.
Year 2000 - 2001: "Geldmarktorientierte Bundesschatzscheine": Bills linked to interbank rates with maturities of 1, 3 and 6 months.
The breakdown between fixed rate and index- linked bonds is not available.
Data include bonds, Federal Obligations and Medium-Term Bills in domestic and foreign currencies.
2.1.2.1.1 Short-term bonds
Maturity up to 1 year.
2.1.2.1.2 Medium-term bonds
Maturity between 1 year to 5 years.
2.1.2.1.3 Long-term bonds
Maturity more that 5 years.
None.
None
None.
Bundesschatzscheine ("Bundesschätze"): Instruments tailored to retail investors, bonds linked to interbank rates with maturities from 1 month to 10 years.
Data include loans and private placements in domestic and foreign currencies.
Starting in January 1989, government bonds have been issued using a price auction system that was replaced in April 1990 by a yield auction system with an "underwritten portion". A syndicate has been underwriting approximately half of the volume to be issued in one year. In February 1991, the yield auction system was modified and is now characterised by the following specifications:
Auction calendar: At the end of each year, the Austrian Federal Financing Agency announces the nominal amount of the expected annual volume of bonds to be issued in the following year with the auction dates. Auctions of government bonds normally take place on Tuesday in the first week of the month. Settlement and official listing comes into effect three days after the auction (normally the following Friday).
Determination of volume and maturity: One week prior to a specific auction, the issuer spells out the maturity (generally 5 or 10 years) and the target amount.
Auction participants: Currently, 6 domestic and 17 foreign banks take part in the auctions. Institutions that are not allowed to participate directly may participate via one of the 23 banks.
Bidding system: Bids are submitted to Oesterreichische Kontrollbank AG, as the agent of the banks and the borrower. An electronic auction system that is called Austrian Direct Auction System (ADAS) is in use for this purpose.
Determination of the coupon and the official issue price: Bids submitted are arranged in accordance to their levels in ascending order. Once the envisaged total amount of the issue has been reached, the average yield of all bids is determined. This average yield is translated into a coupon and an average price. The official issue price is the average price plus a maturity depending on the selling commission.
Issuer's quota: The issue of each government bond is increased by 10% retained by the issuer and sold in the secondary market depending on market conditions or used for repo and securities lending.
i) Debt Issuance Programme (DIP) for government bonds (denominated in euro).
ii) Euro Medium Term Note Programme (EMTN) and Australian Dollar Medium Term Note Programme (AUD MTN) for foreign currency bonds.
iii) ATB-Programme for Treasury Bills (denominated in euro and foreign currency).
iv) Federal obligations.
c) Direct negotiation: Private Placements, Loans and Treasury Bills
d) Sale of "Geldmarktorientierte Bundesschatzscheine" ("Bundesschätze") via Internet
Since August 2002, "Bundeschätze" have been offered directly to retail investors via Internet. By entering the web site www.bundesschatz.at, investors have the possibility to open an account directly with the Republic of Austria. Investors can choose between maturities of 1 month (BS 1), 3 months (BS 3), 6 months (BS 6), 12 months (BS12), 2 years (BS24), 4 years (BS48), 5 years (BS60) and 10 years (BS120), respectively. Upon maturity, they have the option either to re-invest their capital and interest or to receive payment of capital and interest. The opening of an account and all transactions are free of charge.
The debt instruments are valued at the nominal value after swaps (i.e. on a net basis).
The data of weighted average yield of marketable debt covers the nominal interest rate of the total marketable federal debt.
The fiscal year is the calendar year.
Both items "Total Marketable Debt held by Non-residents" and "Total Non-marketable Debt held
by Non-residents" are based on preliminary figures provided by Austrian National Bank.
Residual maturity.
Macaulay and Modified duration methods.
The General Administration of the Treasury, which is a division of the Kingdom of Belgium's Federal Public Service Finance, manages the Belgian federal debt.
Within the Treasury, the administration "Financing of the State and Financial Markets" comprises three departments: the "Debt Agency", the "Public Debt Support Service" and the "Financial Market and Services" department.
The federal government debt comprises debt issued or taken over by the federal government, as well as the debt of other institutions whose debt service cost is borne by the federal government.
The debt of the federated entities such as communities and regions, of the local authorities and of the social security is not included in the federal government debt.
Debt guaranteed by the federal government is also excluded if the government does not bear the debt service cost.
The Belgian Debt Agency, set up in October 1998, is responsible for the operational management of the federal public debt within the guidelines adopted by the Minister of Finance on the proposal of the Strategic Committee. Such guidelines will relate particularly to the structure of the debt portfolio and to the risk level that may be linked with it.
The Belgian Debt Agency consists of three directions:
- the first (D1) carries out all financial transactions in the money and capital markets as well as any financial transaction within the limits of the general guidelines. As such it is responsible for auctions, other types of debt issuance and all other funding operations;
- the second (D2) determines the debt management strategy, assesses and manages market and credit risks, co-ordinates the debt management with the State budget and is in charge of marketing and communication, and the development of new products;
- the third(D3) direction is in charge of the back-office and of the IT systems.
The Debt Agency employs Treasury officials and experts from the private sector, including specialists in finance and information technology.
The Public Debt Support Service is responsible for the relationships with other public borrowing entities in Belgium and the management of the guaranteed debt, as well as certain tasks of an administrative nature such as:
- the budget deficit on a cash basis and the cash forecasts;
- the bookkeeping and the monthly situation of the Debt;
- the financial service of loans, the printing house, the guaranteed debt, the loans issued by the Communities and Regions, and the financial control of public companies;
- the Ledgers and named entries;
- within the Monitoring Committee, the follow up of
. the participations the State has taken in certain banks during the financial crisis;
. the reimbursements of loans to banks;
. the risks of invoking State guarantees awarded to certain banks during the financial crisis;
. the revenues that the State receives in compensation for these participations, loans and guarantees.
The "Financial Markets and Services" Department provides mainly legal advice on laws and regulations related to financial markets, financial services, public markets and public institutions as well as concerning the Treasury, in particular by:
- initiating, developing and applying laws and regulations;
- providing studies and opinions;
- handling files on specific litigations;
- monitoring international developments in financial markets.
Authorisations to borrow and to manage the Belgian federal debt are granted yearly by Parliament to the King or the Minister of Finance. These authorisations are incorporated into the law containing the "Ways and Means Budget", or into a Finance Act.
The Acts of 2 and 22 July 1991 govern the fundamental characteristics of securities issued by the Belgian federal State, such as the acceptable formats; they include dematerialised, book-entry only securities, nominal registrations and outstanding bearer securities.
Either royal or ministerial decrees stipulate the particular technical characteristics of securities issued by the Belgian federal State.
Discounted, euro-denominated three-, six-, and 12-month book-entry securities issued at auctions reserved for primary dealers and recognised dealers of the Kingdom of Belgium. These securities are negotiable on the regulated off-exchange market, on MTF's (Multilateral Trading Facilities), by systematic internalisers, on other regulated markets (cf MiFID-Directive) or on the OTC market.
Book-entry securities initially denominated in foreign currency and intended for placement primarily outside Belgium.
Since the advent of the euro, they are denominated in euros as well as foreign currency.
Certain primary dealers designated for that purpose issue this government's "commercial paper" based on a program.
Treasury bills are issued in the form of Treasury notes within the meaning of Belgian law. They are negotiable, but not on regulated Belgian secondary markets.
None. See 2.1.2.4 on the possibility to issue money market instruments under the Euro Medium Term Notes (EMTN) Programme.
With regard to bonds, there is no particular product corresponding to any given term from issue to maturity.
Long-term fixed-rate bonds issued by the Belgian federal State, regardless of interest payment terms, are the following:
It should also be noted that some of these fixed-rate bonds might also be issued at par, with accumulated interest payable in a lump sum upon maturity.
Other bonds may also be issued at a discount corresponding to the interest accrued to maturity, without coupons.
None.
Currently one.
Long-term borrowings denominated in foreign currencies and negotiable on foreign exchanges.
In 2008, the Kingdom set up an EMTN-Programme aimed at issuing foreign currency notes, swapped into euros, and structured products for maturities comprised between 1 month and 50 years. The notes may be listed on the Luxembourg Stock Exchange.
None.
This category includes:
The highlights to be noted from the above are:
Auctions: This is the primary means of issue for placing the Belgian federal State's main debt securities: treasury certificates and linear bonds. Participation in these auctions is reserved solely for primary dealers, who are specialists in Belgian Treasury securities, and recognised dealers, who are appointed for the same securities.
Syndication: This bond-issuing technique is used to constitute a sufficient volume of linear bond lines to ensure that the issue plays its role as a new benchmark in the market.
Buybacks: buyback of bonds (essentially linear bonds maturing within the next 12 months) is undertaken by the Treasury via an electronic interdealer trading platform - MTS Belgium. The price for these transactions is determined on a segment aside from the platform (- BBB) where only the Treasury and the primary dealers have access. The Treasury posts there the buy-back prices. But, it can accept the selling prices displayed on that segment by the primary dealers. It should be noted that buybacks can also as well be carried out via the phone.
The Treasury also buy-backs its State notes (retail bonds).
Reverse buybacks: The Treasury can also buyback, at once, a larger amount of one or more linear bonds with a reverse auction at the start of the BB of an OLO maturing within 12 months or on longer dated OLOs proposed by the primary dealers. During a reverse auction, the Primary and Recognised Dealers offer bonds at a specific price. The Treasury then accepts the offers in function of the sales price.
Tap issues: dealers appointed by the Belgian federal government use these to issue Treasury bills (BTBs) in tranches for placement.
Issues through commission agents: financial institutions that are appointed for one-year term by the Ministry of Finance, based on a contract, place State notes specifically with individual investors.
Valuation is at face value, except in respect of Treasury certificates and Treasury bills, for which the net amount paid by investors is used, insofar as the face value includes interest that is not payable until maturity.
Calendar year.
None.
Residual maturity.
Modified duration.
Country notes are primarily based on the Debt Management Report, published by the Department of Finance (Canada) and the Summary of Government of Canada Direct Securities and Loans, published by the Bank of Canada.
Department of Finance Canada, in conjunction with the Bank of Canada, manages the federal market debt with the fundamental objective of raising stable and low-cost funding to meet the financial needs of the government.
The Financial Markets Division of the Department of Finance performs analysis, develops policies and provides strategic advice to the Minister of Finance for borrowing programs of the federal government, including borrowings for official reserve purposes, and the management of financial risks. The Division works in partnership with the Bank of Canada, the Government's fiscal agent, on all aspects of debt management.
The Bank of Canada is responsible for the operational aspects of debt management. In this role, the Bank of Canada conducts the auctions of government debt, issues debt instruments, makes interest payments, and undertakes foreign currency borrowing operations. The Bank of Canada also has responsibility for monitoring market activities and advising on debt management policy issues, as well as coordinating risk management activities with the Department of Finance.
The reported data corresponds to outstanding amounts of debt issued by the federal government and does not include off-balance-sheet derivatives (e.g. swaps).
The data does not include non-market debt (i.e. debt not issued to the general public). Non-market debt is, however, a component of the Government of Canada's net liability position and is reported in Canada's Public Accounts
Government of Canada money market instruments are securities with an original term to maturity of one year or less. These include Treasury bills and Canada bills.
Treasury bills are issued through public tender (discriminatory-price auction) on a discount basis to Government Securities Distributors. Treasury bills with terms to maturity of approximately 3, 6, or 12 months are currently auctioned on a bi-weekly basis, generally on Tuesday for delivery on Thursday. Under the bi-weekly issuance pattern, new 3-month (98 days) Treasury bills are issued at each bi-weekly auction, while 6- and 12-month Treasury bills are reopened every second auction.
All new issues of Treasury bills are issued in book-entry form, whereby only a book-entry for the full amount of the Treasury bills is issued in the Canadian Depository for Securities (CDS), Canada's electronic ledger system for securities transactions (CDSX). Treasury bills must be purchased, transferred, or sold, directly or indirectly, through a participant of CDSX (debt clearing service operated by the Canadian Depository for Securities) and only in integral multiples of C$1,000 (face value).
Cash Management Bills (CMBs) are periodically issued by the Government of Canada. CMBs are Treasury bills with maturities of less than 3 months (terms to maturity can be as short as one day) and provide short-term financing for the government. CMB auctions can take place on any business day, typically for next day delivery, but on some occasions for same day delivery.
The Government of Canada does not issue domestic Canadian dollar commercial paper. (See Canada Bills below).
Canada Bills are promissory notes denominated in US dollars. They are issued only in book-entry form and are sold through syndication. Canada Bills mature within 270 days from their date of issue and are discount obligations with a minimum order size of USD 1 million and a minimum denomination of USD 1,000. Delivery and repayment of Canada Bills generally occur in same day funds. Rates on Canada Bills are posted daily for terms ranging between one and nine months.
Canada Bills are issued to meet Government of Canada foreign currency requirements. For more information on foreign exchange reserve funding, please see section 2.1.2.1.
Domestic marketable bonds of the Canadian Government include nominal fixed-coupon marketable bonds and inflation index-linked bonds (Real Return Bonds, since December 1991). Canada does not regularly issue foreign debt instruments but has three types of foreign currency bond obligations: foreign currency bonds, Canada Notes (since March 1996), Euro Medium-Term Notes (since July 1997).
Domestic Canadian dollar nominal fixed-coupon marketable bonds are sold via public tender (discriminatory-price auctions, bond buyback operations on a switch basis) to Government Securities Distributors (GSDs) and customers (through GSDs).
Government of Canada marketable bonds have been issued, since October 1995. As of 1 April 2008, marketable bonds are issued in book-entry form for the full amount of the bonds issued in the Canadian Depository for Securities (CDS), Canada's electronic ledger system for securities transactions (CDSX). The bonds must be purchased, transferred or sold, directly or indirectly, through a participant of CDSX operated by the CDS and only in integral multiples of C$1,000 (face value).
Bond buyback operations on a switch basis involve the exchange, on a duration neutral basis, of less-liquid bonds with a remaining term to maturity of 12 months to 25 years, for building benchmark bonds.
2.1.2.1.1 Short-term bonds
Short-term bonds include all bonds with a remaining term to maturity of 3 years and less. Canada currently issues benchmark 2-year and 3-year domestic bonds.
2.1.2.1.2. Medium-term bonds
Medium-term bonds include all bonds with a remaining term to maturity between 3 years and 5 years. Canada currently issues benchmark 5-year domestic bonds.
2.1.2.1.3. Long-term bonds
Long-term bonds include bonds with a remaining term to maturity of 5 years and over. Canada currently issues benchmark 10- and 30- year domestic bonds.
Government of Canada Real Return Bonds (RRBs) are sold via public tender (single-price auctions) to Government Securities Distributors (GSDs) and customers (through GSDs). RRBs pay semi-annual interest based upon a real interest rate. Unlike standard fixed-coupon marketable bonds, interest payments on RRBs are adjusted for changes in the Consumer Price Index (CPI). The referenced CPI, for the purposes of RRBs, is the all items non-seasonally adjusted CPI for the third preceding calendar month for Canada published monthly by Statistics Canada.
These bonds must be purchased, transferred, or sold, directly or indirectly, through a participant of the CDSX and only in integral multiples of C$1,000 (face value).
The RRBs are issued with an original term to maturity of 30-years.
Canada does not regularly issue foreign currency bond obligations. Canada does issue three types of foreign currency bond obligations exclusively for foreign exchange reserve funding: foreign currency bonds, Canada Notes (since March 1996), Euro Medium-Term Notes (since July 1997) the use of which depends on funding needs and market conditions. Foreign exchange reserve funding requirements are also met through an ongoing program of cross-currency swaps of domestic obligations.
Foreign Currency Bonds
Foreign currency bonds are marketable debt instruments issued in foreign currencies with fixed or floating interest rates. At present, all issues of foreign currency bonds are available in global certificate form only. All outstanding issues of foreign currency bonds have been listed on Luxembourg Stock Exchange.
Canada Notes are promissory notes usually denominated in United States dollars and issued in book-entry form. Canada Notes are usually issued in denominations of USD 1,000 and integral multiples thereof. Notes can be issued for terms of 9 months or longer, and can be issued at a fixed or a floating rate.
The interest rate or interest rate formula, the issue price, stated maturity, redemption or repayment provisions, and any other terms are established by Canada at the time of issuance of the Notes and will be indicated in the Pricing Supplement.
The EMTN program further diversifies the sources of cost-effective funding for Canada's foreign exchange reserves. Notes issued under this program can be denominated in a range of currencies and structured to meet investor demand.
EMTNs are medium-term notes issued outside the United States and Canada. EMTNs can be issued with fixed or floating interest rates, include embedded options, make coupon payments in one currency and the principal payment in another currency, and maturities can range from short-term to long-term. EMTNs are sold on a private placement or public offering basis.
None (after 1998).
Other Government of Canada marketable bonds include unclaimed matured and outstanding market issues.
Canada currently issues two types of savings bonds, which are designed and intended for retail clients.
Canada Savings Bonds are currently offered for sale by most Canadian financial institutions. Many Canadians also elect to purchase CSBs through payroll deduction plans at participating employers.
Except in certain specific circumstances, CSBs can only be registered in the name of residents of Canada and are available in both regular interest and compound interest forms. Denominations range from C$100 (C$300 for regular interest bonds) to C$10,000. All CSBs are non-callable and, except in certain limited circumstances, non-transferable.
CSBs provide minimum guaranteed annual interest rates. The minimum guaranteed annual interest rate will be increased if market conditions warrant, but the bondholder will not earn less than the rate announced for that series for the posted period. They may be cashed at any time and, after the first 3 months, pay interest up to the end of the month prior to redemption.
The Canada Premium Bond is a retail investment and savings product introduced by the Government of Canada in 1998. Like CSBs, they are available for sale in most Canadian financial institutions and during the same sales period.
Canada Premium Bonds offer 3-years of step-up interest rates which are re-priced every three years until maturity. They are redeemable once a year on the anniversary of the issue date and during the 30 days thereafter without penalty.
Other Government of Canada non-marketable debt includes Canada Pension Plan (CPP) bonds.
Selling techniques of Government of Canada debt instruments are described above.
Nominal value. For Index-Linked Bonds, without inflation adjustment.
From 1st April to 31 March of the following year. For the tables in this publication, all the series have been recalculated on a calendar year basis.
Outstanding debt figures are rounded to the nearest million dollars.
Residual maturity.
Modified duration:
Average term to maturity (ATM):
Swaps are not included in the calculation of ATM.
The legal basis for raising central government loans rests with the President of the Republic. The annual Budget Law authorizes the President to contract obligations up to an annual ceiling (in 2007 and 2008 a maximum of USD 1.2 billion and 2.2 billion, respectively). The authorization for each debt transaction is exercised through a Presidential Supreme Decree, with the accompanying signature of the Finance Minister, the Comptroller General, and the Treasurer.
The main law governing debt management is the Law of General Financial Administration of the State, which dates from 1975. This law deals mainly with legal terms and procedural steps. There is no specific law for public debt management. Instead, the general Decree for Financial Administration of the State [Law], (Decreto Ley Organico de Administracion Financiera) No. 1263 of 1975 provides the fundamental legal framework. The Decree Law:
The Minister of Finance, by delegation of the President of the Republic, decides on the instruments to be issued and on the issuance procedures.
In addition to this, the Central bank of Chile (CBC), by designation of the President of the Republic and acting as Fiscal Agent, has been responsible for the auction of the Treasury Bonds in the local market. The CBC uses SOMA (Sistema de Oferta de Mercado Abierto) for auction execution. The Ministry of Finance selects investment banks to execute external market issuances.
None.
None.
None.
None.
In general, local bonds issuances are median-term instruments, denominated in local currency, some of them indexed to inflation. Foreign bonds issuances are typically in dollars and medium-term instruments.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
Between 1999 and 2003, Sovereign Bonds in dollars were issued in the international financial markets.
The bonds pay semiannual coupons, and do not have any additional warranties. The next table provides some details about these bonds
Issuance Year | Maturity Year | Nominal Amount | Coupon Rate (%) |
1999 | 2009 | USD 500 millions | 6.875 |
2001 | 2012 | USD 750 millions | 7.125 |
2002 | 2007 | USD 600 millions | 5.625 |
2002 | 2009 | USD 150 millions | 6.875 |
2003 | 2013 | USD 1,000 millions | 5.500 |
In the last years, the Government of Chile issued local currency fixed interest bonds with 10 years maturity (BTP-10). The next table provides some details about these bonds:
Issuance Year | Maturity Year | Nominal Amount | Coupon Rate (%) |
2007 | 2017 | CLP 170 billions | 6.0 |
2008 | 2018 | CLP 200 billions | 6.0 |
2.1.2.1.3 Long-term bonds
None.
At the end of 2003, the Government started with first issuance of bond denominated in UF (Unidades de Fomento) which is indexed to Chilean inflation. Since then, these types of bonds are issued each year and typically have a 20- and 30-years maturity, BTU-20 and BTU-30 respectively.The next table provides some details about these bonds:
Issuance Year | Maturity Year | Amount (UF) | Coupon Rate |
2003 | 2023 | 13,000,000 | 4.50 |
2004 | 2024 | 18,000,000 | 4.50 |
2005 | 2015 | 11,000,000 | 2.10 |
2005 | 2025 | 11,000,000 | 2.60 |
2007 | 2027 | 11,000,000 | 3.00 |
2008 | 2028 | 20,600,000 | 3.00 |
2008 | 2038 | 17,100,000 | 3.00 |
The bond was issued in 2004 and pays quarterly coupons and does not have any additional warranties.
The Coupon rate of this floating rate government bond is linked to the 3-month LIBOR set 3 months in advance and has a fixed spread of 40bp.
The next table provides some details about these bonds:
Issuance Year | Maturity Year | Nominal Amount | Coupon Rate (%) |
2004 | 2008 | USD 600 millions | Libor 3 months + 0.40% |
None.
None.
None.
Selling techniques are different for external and domestic debt.
Domestic Debt Issuance Process
Initially, the CBC defines the primary market participants. These participants are typically large investors -not primary dealers - and must have access to SOMA. The participants sign off on general mandate for the CBC which will allow the CBC to deposit, under the participants' names, the securities bought in the Depósito Central de Valores (DCV).
A Supreme Decree (Decreto Supremo) related to the debt issuance is issued by the President of the Republic who gives the mandate and signs along with the Finance Minister. This Decree authorizes the bond issuance, establishes bond's financial conditions and assigns the CBC as fiscal agent. Subsequently, the Simil is published on Hacienda Website and the CBC publishes the auction operational rules, e.g., hour, bond characteristics, type of auction (Dutch), form of payment, etc.
The Treasury issues a letter authorizing the CBC to carry out the auction and the Finance Minister issues a letter to the CBC, specifying: date of auction, amount to be placed in each auction, and Ministry of Finance staff that can be present at the auction to check the process. Finally, funds are deposited in Treasury´s current account (in domestic currency) in the CBC.
Foreign Exchange Debt Issuance Process
A Supreme Decree authorizes the bond issuance. The President of the Republic gives the mandate and signs along with the Finance Minister. This Decree authorizes the bond issuance, establishes bond's general financial conditions, and uses of funds.
Then, the Ministry of Finance selects the investment bank as Lead Manager. Finally, the Ministry of Finance staff builds an order book and allocates debt to investors based on proper guidelines.
Face value. For risk management purposes, mainly duration analysis, market value is taken into consideration.
The fiscal year is the calendar year.
Every year the Draft Budget Law must be presented by government to parliament before October, with an authorization to issue debt up to a certain limit. At the end of the year the Ministry of Finance presents its updated issuance estimates for the coming year based on the limit authorized by the Congress, providing data for issuances of bonds broken down by maturity.
In 2007, the Budget Law authorised the Debt stock to grow by up to some 2.200 million US dollar for 2008.
| Gross issuance | Redemptions | Change in debt stock | Bills issuance | Bonds issuance | Foreign currency |
Dec-08 forecast (*) | 1.090.804 | 498.939 | 591.865 | 0 | 991.640 | 99.164 |
(*) Pesos million
The following chart shows the maturity profile at end-2007 for debt issued by the Treasury.
CENTRAL GOVERNMENT DEBT: REDEMPTION CALENDAR AS AT 12/31/07 - Pesos million
| Local Market | Foreign currency | None Marketable |
|
Year | Bonds | Bonds | Debt | Total |
|
|
|
|
|
2008 | - | 291.542 | 207.397 | 498.939 |
2009 | - | 218.657 | 44.786 | 263.442 |
2010 | - | - | 61.675 | 61.675 |
2011 | - | - | 53.395 | 53.395 |
2012 | - | 323.770 | 36.846 | 360.617 |
2013 | - | 414.506 | 32.293 | 446.798 |
2014 | - | - | 30.549 | 30.549 |
2015 | 215.849 | - | 29.776 | 245.625 |
2016 | - | - | 29.946 | 29.946 |
2017 | 171.700 | - | 26.931 | 198.631 |
2018 | 1.157.344 | - | 170.393 | 1.327.738 |
2019 | - | - | 25.910 | 25.910 |
2020 | - | - | 25.137 | 25.137 |
2021 | - | - | 22.798 | 22.798 |
2022 | - | - | 19.262 | 19.262 |
2023 | - | - | 16.353 | 16.353 |
2024 | - | - | 404.549 | 404.549 |
2029 | - | - | 366.240 | 366.240 |
2032 | - | - | 227.399 | 227.399 |
2037 | - | - | 7.178 | 7.178 |
Total | 1.544.894 | 1.248.475 | 1.838.813 | 4.632.182 |
On behalf of the Czech Republic, the Ministry of Finance (MoF) issues government securities and is also responsible for debt and cash management. Government securities issuance policy is regulated by the Act on Capital Market Business, the Act on Debt Securities and special acts giving the MoF a limit for debt (government issuance program) and deficit financing. The Czech National Bank (CNB) acts as an agent for the MoF. The CNB runs MoF accounts, organises both Treasury bill and Treasury bond auctions on domestic market, and operates on the secondary market on behalf of the MoF in cases approved by the MoF. In 2009, the CNB organized auction of euro-denominated floating rate notes as well.
Treasury bills are issued as discounted instruments with the face value of CZK 1 million. Treasury bills are registered within the short-term securities market system (SKD), which is a book-entry system managed by the CNB. It combines the roles of a central registrar for owners of book-entry securities and Delivery versus Payment (DVP) settlement system for them. The SKD provides a real time gross settlement using the Central bank's national Clearing Centre for payments. Only book-entry instruments with maturities less than 1 year may be registered there. Treasury bills are issued with the standard maturities of 13, 26, 39 and 52 weeks. The issuance calendars were published for the whole fiscal years until the year 2001. Since the year 2002, the issuance calendars are published on a quarterly basis. During the global financial crisis the periodicity of issuance calendars publication was changed to monthly. This was applied between October 2008 and December 2009.
None
None
Domestic Treasury bonds are issued as fixed interest-bearing securities in a book-entry form with a face value of CZK 10 000. The Central registry is run by the Central Securities Depository, which does not provide the clearing of transactions. MoF intends to launch an electronic trading platform MTS Czech Republic starting on 1 July 2011.
Until the end of 1999, the MoF issued regularly Treasury bonds with maturities of 2 and 5 years. Since January 2000, a new Treasury bond issuance program has been adopted. Benchmark bonds with maturities of 3, 5, 7 and 10 years have been introduced. In January 2001, bonds with maturities 15 years were launched. Since 2006, bonds with maturity of 30 years, and since 2007, bonds with maturity of 50 years have been issued in addition1. On 1 January 2008, the Ministry of Finance took over 7-year bond of former Czech Consolidation Agency in the amount of CZK 5 bn redeemed in 2010. In 2010, 11-year bond was issued.
The issuance calendars were published for the whole fiscal years until the year 2001. Since the year 2002, the issuance calendars have been publishing on a quarterly basis. During the global financial crisis the periodicity of issuance calendars publication was changed to monthly. This was applied between October 2008 and December 2009.
Since the year 2004, the Czech Republic issues also Eurobonds with maturities 10 years (in 2004, 2008 and 2010), 15 years (in 2005) and 5 years (in 2009). In 2006, the Czech Republic realized first issue of 30-year yen bonds.
First issue of 30-year yen bonds took place on 16 January 2006 in the amount of JPY 30 bn, ISIN XS0239748782, coupon with fixed interest rate of 2.75 % p.a. Face value of bonds made JPY 1,000,000. The whole amount was placed into the portfolio of sole institutional investor.
First 7-year issue of bond denominated in Swiss francs took place on 23 November 2009 in the amount of CHF 500 mil., ISIN XS0239748782, coupon with fixed interest rate of 2.875 % p.a. Face value of bonds made CHF 5,000.
2.1.2.1.1 Short-term bonds
Bonds with a residual maturity less than 1 year
2.1.2.1.2 Medium-term bonds
Bonds with a residual maturity of 1 to 5 years
2.1.2.1.3 Long-term bonds
Bonds with a residual maturity of more than 5 years
In 1997, the MoF issued special "Flood" bonds in a total amount of CZK 5 billion linked to CPI index. A part of these bonds was in paper form and was sold mainly to households and companies.
First tranche of first issue of CZK-denominated 8-year floating-rate notes (55th issue of Government Bonds) took place on 27 October 2008 in the amount of CZK 5.39 bn, ISIN CZ0001002331, coupon paid twice a year, with reference rate 6M PRIBOR fixed for 6 months.
First tranche of first issue of CZK-denominated 3-year floating-rate notes (57th issue of Government Bonds) took place on 20 April 2009 in the amount of CZK 8.53 bn, ISIN CZ0001002505, coupon paid twice a year, with reference rate 6M PRIBOR+100 basis points fixed for 6 months.
First tranche of first issue of EUR-denominated 6-year floating-rate notes took place on 5 October 2009 in the amount of EUR 262 mil., ISIN XS0453511577, coupon paid twice a year, with reference rate 6M EURIBOR+100 basis points fixed for 6 months. MoF tapped the market in January 2011 with a remaining volume of the note from its own portfolio, thus increasing amount outstanding to EUR 300 mil.
None
MoF intends to launch the first Government Bond Issue for retail investors in two series with maturities of 1-2 years and 5-6 years in 2nd half of 2011. The former one will be a discounted note and the latter will be a coupon-bearing bond. Yields on these securities will be consistent with the current Czech Government Bond Yield Curve. Trading of these securities will not be allowed.
Loans provided by commercial banks (domestic as well as foreign), the Central bank (fully repaid in February 1996), the World Bank (fully prepaid in September 2003), 6 OECD countries (fully prepaid in September 2003), the European Communities (fully repaid in March 1998), promissory notes for IBRD and EBRD memberships, notes issued for international financial institutions and starting in December 2002 loans from the European Investment Bank.
The "Dutch" auction (single price) is used for the sale of Treasury bills and "American" auction (multiple prices) for the sale of Treasury bonds and floating rate notes. Only in the case of "Flood" bonds, public offer was used. Another exception was the first issue of Treasury bonds, which was privately placed in 1993. Savings bonds issue planned for 2011 will be organized as public offer as well.
Treasury bills: On 1 August 1995, after a new TKD system (SKD at present) was established, a group of direct participants in Treasury bills auctions has been set up. Only banks or securities brokers/dealers licensed by the Securities Commission may become direct participants. The SKD is based on the membership principle and only members with securities accounts may purchase Treasury bills. The members are divided into agents equipped with terminals for online communication with SKD centre, and clients who may keep a securities account within the SKD system. Only banks or securities brokers/dealers may become agents. Clients have standard access to their securities accounts only via agents. The SKD system was intended to guarantee a wholesale market of Treasury bills.
Treasury bonds and floating rate notes 2 : In 1995, a group of direct participants was set up to take part in T-bond auctions directly and to provide subsequent sales of Treasury bonds. The group of direct participants was set up as an "open" group from banks operating in the Czech Republic or securities brokers/dealers licensed by the Securities Commission. Interested parties who fulfill the criteria for direct participation can join the group. These direct participants also operate as intermediaries for companies as well as individuals on the primary market. For participation in the group of "Direct participants" the applicants must meet the criteria formulated by the Ministry of Finance and the Czech National Bank.
Eurobonds 3 : Eurobond issues were sold in a standard way by syndication.
Yen bonds: Yen bond issue was privately placed to sole investor.
Swiss franc bonds: Swiss franc bond issue was sold through a sole underwriter.
Notes to the content of statistical tables in 2006 year:
The difference in the value of total marketable debt in table 1 and 4 in the year 2006: The difference of CZK 2,412,000,000 between the value of total marketable debt in table 1 and 4 is the value of collateral amount of passive deposit operation that Ministry of Finance (MoF) accepted at the end of 2006 year in the nominal amount of CZK 2,400,000,000.
While data in table 1 reflects nominal cash value of debt instruments, table 4 comes from a legal viewpoint on government securities holdings. The sum of CZK 765,026,904,750 of total marketable debt in table 4 is given by the value of government securities issued and is based on the information from Czech National Bank (T-Bills) and the Securities Centre (T-Bonds). This sum includes the value of securities serving as collateral as well that are from a legal viewpoint considered as issued by Ministry of Finance.
Though MoF knows the name of its repo operation counterparty (it was resident), T-Bills in the role of collateral are marketable so MoF is not able to decide whether the aforementioned T-Bills in the value of 2,412,000,000 were fully or partially lent to any representative of non-residents. It means that MoF cannot reduce the value of 765,026,904,750 by the collateral value of the repo operation (CZK 2,412,000,000) without the risk of statistics distortion in the items of residents and non-residents.
In table 1, the passive repo operation in the amount of CZK 2,400,000,000 is considered as short-term loan which means that is included in the total non-marketable debt.
Notes to the content of statistical tables in 2010 year :
In table 4, the volume of marketable debt held by residents makes approximately CZK 883,213.8 bn, the volume held by non-resident CZK 373,327.7 bn and total marketable debt reaches 1 276 577.4 bn. The difference between the sum of debt held by residents and non-residents on one hand and the total volume of marketable debt on other hand in the approximate amount of CZK 20 035.9 bn is caused by the volume of securities held by unidentified holders that are concentrated on omnibus accounts of custodian banks.
Face value is used to evaluate outstanding debt instruments.
Is calendar year
None
Residual maturity
Modified
1. First tranche of first issue of CZK-denominated 30-year bonds (49th issue of T-Bonds) took place on 4 December 2006 in the amount of CZK 13.07 bn, ISIN CZ 0001001796, coupon with fixed interest rate of 4.20 % p.a. Bonds include separated coupon and principle.
First tranche of first issue of CZK-denominated 50-year bonds (53th issue of T-Bonds) took place on 26 November 2007 in the amount of CZK 4.75 bn, ISIN CZ 0001002059, coupon with fixed interest rate of 4.85 % p.a. Bonds include separated coupon and principle.
2. Including auctions of euro-denominated floating rate notes
3. Including bond denominated in Swiss francs
The Minister of Finance holds the overall, and political, responsibility for central-government borrowing and debt, including relations to the Folketing (Parliament). Since 1991, Government Debt Management at Danmarks Nationalbank (the central bank of Denmark) has undertaken the management of the central- government debt. This division of work is set out in an agreement between the Ministry of Finance and Danmarks Nationalbank.
The overall strategy for government borrowing is determined at quarterly meetings between the Ministry of Finance and Government Debt Management at Danmarks Nationalbank. At Danmarks Nationalbank, the tasks related to the management of the government debt are undertaken by Government Debt Management within Financial Markets, Market Operations, Accounting, Government Debt Accounting, and Audit.
The distribution and the extent of the central government's domestic and foreign borrowing are managed via the central-government borrowing funding rules (the norm), which is set out in an agreement between the government and Danmarks Nationalbank. There is a norm for both domestic and foreign borrowing, and together they ensure the separation of fiscal policy and monetary policy.
In overall terms, the domestic funding rule states that domestic borrowing in kroner covers the central government's gross domestic financing requirement, i.e. the central government's current deficit and redemptions on the domestic debt. The foreign debt is raised in order to maintain an adequate foreign-exchange reserve. As a general rule, the central government raises foreign loans equivalent to the redemptions on foreign debt. Borrowing in foreign currency does not influence domestic liquidity, but is included directly in the foreign-exchange reserve.
The total and the net central government debt in Denmark are defined as:
The Social Pension Fund was established in 1970 by the Social Pension Fund Act, whereby a special national retirement pension contribution was introduced. The proceeds were allocated to the Social Pension Fund and invested in bonds. With effect from 1982, the Act was amended, and the payments made to the Social Pension Fund ceased. The Social Pension Fund continued as an asset of the central government. The Advanced Technology Foundation Act was adopted in 2004. The objective of the Advanced Technology Foundation is to strengthen growth and employment by supporting Denmark's further development as a high-technology society. The Preventive Measures Fund was established in 2007 with a view to supporting projects to forestall and prevent physical and mental impairment.
All major central government payments are settled on the central government's account with Danmarks Nationalbank. In addition to managing the central government debt, Government Debt Management at Danmarks Nationalbank is also responsible for the management of the central government's account with Danmarks Nationalbank. The management of the account is an integral part of the government debt management.
The data provided in Tables 1 and 2 of the present publication relate to total central government debt (i.e. domestic debt and foreign debt). The data provided in Table 3 relate to net central government debt (i.e. Total central government debt less the balance of the central government's account with Danmarks Nationalbank and the assets of the Social Pension Fund, the Advanced Technology Foundation and the Preventive Measures Fund).
The net central government debt is presented in Table A.
Table A. The net central government debt, end-2009 and end-2010
|
Billion DKK |
End-2009 |
End-2010 |
|
Domestic debt |
488 |
576 |
|
Foreign debt |
140 |
115 |
|
Central government's account with Danmarks Nationalbank |
-211 |
-177 |
|
Government funds |
-115 |
-128 |
|
Net central government debt |
302 |
386 |
Note: A positive figure indicates a liability; a negative figure indicates an asset.
At end of 2010, the central government net debt amounted to DKK 386 billion, corresponding to 22 per cent of GDP. The definition and coverage of the total central government debt figures for Denmark differ from the definitions of the general government consolidated gross debt compiled in accordance with the EU treaty. According to The European Commission's autumn 2010 forecast, the general government consolidated gross debt in Denmark was forecasted at 44.9% of GDP by the end of 2010.
As from 1992, all Danish outstanding government debt is classified as marketable.
Treasury bills are short-term domestic government securities. The T-bill programme was reopened in 2010 in order to expand the central government's investor base, given the higher government financing requirement. Monthly auctions have been held since February 2010, and by year-end an outstanding amount of DKK 25 billion had been accumulated under this programme.
Two Commercial Paper (CP) programmes for foreign short-term borrowing are available for raising short term funding. The programmes are aimed at the euro market and the US market, respectively. The euro-market programme can be used for issues in several currencies, while the US programme can solely be used for issues in dollars. The euro-market programme has a maximum outstanding of USD 12 billion, while maximum outstanding in the US programme is USD 6 billion. Since the currency exposure of the foreign debt is exclusively in euro, CP issues in other currencies than euro are combined with forward contracts in foreign exchange, so that the final exposure is in euro.
The CP programmes serve as contingency facilities that can be used to quickly increase the foreign- exchange reserve or the balance of the central government's account.
The total amount of outstanding bonds consists of foreign and domestic bonds. The net debt figures in Table A are compiled after end-exposure, which is after swaps that are concluded as an integrated part of specific issuances.
Currently all domestic bonds are issued as fixed rate bullet loans with annual interest payments. Domestic and euro interest-rate swaps are used for management of the duration of the debt. At the end of 2010, the central government's portfolio of interest-rate swaps amounted to DKK 109 billion in terms of notional principal value.
The interest-rate swaps are primarily from 5 or 10 years DKK or EUR fixed rate to respectively 6-months CIBOR (Copenhagen Interbank Offered Rate) or 6-months EURIBOR. All these interest rate swaps are portfolio swaps and therefore not connected to specific loans. In the tables in this publication these portfolio interest-rate swaps are notincluded in the decomposition of the debt since they do not affect the structure of the marketable debt.
Since 2001, the central government has used domestic issuance combined with cross-currency swaps from kroner to euro as a supplementary instrument for covering the central government's foreign borrowing requirement. In the tables in this publication, these swaps are included on a net basis because they change the structure of the debt between foreign and domestic debt.
Government Debt Management resumed foreign borrowing at the end of 2008 after some years' absence where the strategy followed was using domestic issuances combined with currency swaps to cover foreign borrowing requirement. However, the financial turmoil has highlighted the importance of being present in the foreign borrowing markets on a regular basis. To ensure access to foreign capital markets, the strategy is to issue an annual 5-year euro loan of EUR 1-2 billion. Supplementary issuance will take place primarily in euro or dollars in the 2-5-year maturity segments. To minimize the exchange-rate risk, the central government's foreign debt portfolio is exposed solely in euro.
Domestic borrowing in this category includes zero-coupon bonds, fixed rate bullet loans and serial bonds.
Currently all longer-term domestic borrowing is conducted using fixed rate bullet loans. Up until 2005, the strategy for domestic borrowing was centered on building up large liquid bond series in 2-, 5- and 10-year maturity segments. Due to fall in central government debt, the issuance in 2007 was concentrated in fewer government securities with focus on the 10-year maturity segment. In 2008, the financial crisis required flexibility in issuance strategy and issuance took place, besides the 10-year maturity segment, also in shorter segments and in 30-year maturity segment. In response to expectations of a greater issuance requirement in 2009, the strategy for issuance of domestic government bonds was revised and the 10-year maturity segment was supplemented with issuances in the 2- and 5-year maturity segments. In view of the considerable borrowing requirements anticipated for 2011 and the coming years, the strategy going forward continues to be the issuance of bonds in the 2-, 5- and 10-year maturity segments on the basis of a 40-20-40 percentage distribution.
Serial bonds have not been used for domestic borrowing since 1985.
Before 2003 the outstanding amounts of foreign fixed rate loans on short-term, medium-term and long-term are based on estimates (see 4.3).
2.1.2.1.1 Short-term bonds
See 2.1.2 and 2.1.2.1.
2.1.2.1.2 Medium-term bonds
See 2.1.2 and 2.1.2.1.
2.1.2.1.3 Long-term bonds
See 2.1.2 and 2.1.2.1.
2.1.2.2 Index-linked bonds
None.
Variable-rate notes are only part of the foreign debt.
Perpetuals and lottery bonds are included in this category.
None.
None.
None.
Danmarks Nationalbank issues government bonds on behalf of the central government. Danish government bonds are issued via regular auctions supplemented with tap sales to primary dealers in Danish government bonds. Tap sale means that issuances are distributed over the course of the year and takes place directly in the secondary market at prices quoted by the primary dealers.
Buy-backs of domestic securities from the market are used to smooth out the redemption profile between the years, to support liquidity in the key on-the-run issues, and to reduce the refinancing risk. Government buy-backs of domestic securities take place with the primary dealers as counterparties.
The data in Table 1 are at nominal value, while data in Table 2 are at market value.
The data provided in Tables 1, 2 and 4 relate to total central government debt (i.e. domestic debt and foreign debt). The data provided in Table 3 relate to net central government debt (i.e. Total central government debt less the balance of the central government's account with Danmarks Nationalbank and the assets of the government's funds.
Is calendar year.
Weighted average yield of marketable debt is calculated as total interest costs (including distributed capital losses on issues) in per cent of the total central government debt.
Information on total marketable debt held by non-residents. Danmarks Nationalbank compiles the ownership distribution on resident and non-resident. These figures are adjusted for repurchase agreements between Danish banks and non-residents. Moreover, estimated adjustments are made for residents' holdings in securities accounts abroad, e.g. Euroclear. Figures before 1997 are partly estimated. The non-resident ownership share of foreign debt is assumed 100 per cent.
The decomposition of the foreign debt before 2003 is partly estimated using the total outstanding redemptions distributed over years, outstanding foreign debt and total outstanding variable notes of foreign debt.
Residual maturity.
The duration of the Danish government debt is calculated as Macaulay duration.
The duration figures in Table 3 relate to net central government debt. The duration of total debt is calculated by weighing the duration of the sub portfolios of the debt with their respective market values. The duration of the liabilities in the portfolio is calculated with a positive sign, while the duration of the portfolio's assets is calculated with a negative sign. The duration of the central government's account with Danmarks Nationalbank is zero.
1. Introduction
Institutional, organisational and regulatory information.
The State Treasury Department in the Ministry of Finance is responsible for the issuance, management and surveillance of the Central Government Debt. Debt issuance procedures and the choice of the instruments are also the responsibilities of the State Treasury Department. However, several units classified into the central government are allowed to issue debt on their own.
The delimitation of the Central Government sector matches the sector delimitation in quarterly financial account compilation and Excessive Deficit Procedure notifications. Several units (mainly Hospitals, Foundations) were reclassified into the Central Government sector in 2008. There are also three non-financial corporations classified into the central government sector. The main purpose of these enterprises is to provide services to the government. All sector classification decisions are in line with the guidelines of the ESA95 and the ESA95 Manual of General Government Deficit and Debt (MGDD).
The Central Government debt is calculated according to the EU Excessive Deficit Procedure. The liability instruments used are similar to the instruments in ESA95 framework, with the exception of AF.7 - "other accounts payable". The AF.33 (securities other than shares, excluding financial derivatives) liabilities of the central government sector are shown under "Marketable debt" and AF.4 (loans) are shown under "Other non-marketable debt". In Estonia, there are no debt liabilities under the instrument AF.2 (currency and deposits).
2. Description of debt instruments
2.1. Marketable debt
2.1.1. Money Market Instruments
2.1.1.1. Treasury bills
None.
2.1.1.2. Commercial papers
None.
2.1.1.3. Other
None.
2.1.2. Bonds
2.1.2.1. Fixed rate income instruments
None.
2.1.2.1.1. Short-term bonds
Short term bonds were issued in 2009. Majority of bonds were bought back within 2009.
2.1.2.1.2. Medium-term bonds
The Government has only once issued the medium term bonds. These were five-year Eurobonds with a nominal value of 100 million EUR, issued in 2002. The bonds were issued at the slight discount (98.98 million EUR). Credit Suisse was used as a mediator in the selling process.
2.1.2.1.3. Long-term bonds
Some long-term bonds were issued in 1993 to cover various military expenditures, maturity in 2007, but were bought back in 2002.
Another emission of long-term bonds by a unit classified in central government sector took place in 2008 and 2009; the nominal value of bonds issued each year was 602 million EEK (38.5 million EUR). The bonds yield 4.67% and have a maturity of 10 years. In 2010, these bonds were bought by a resident financial corporation and are no longer classified under debt held by non-residents.
2.1.2.2. Index-linked bonds
None.
2.1.2.3. Variable-rate notes
None.
2.1.2.4. Other
None.
2.2. Non-marketable debt
Central Government loan (AF.4) liabilities are recorded under this heading. In Estonia, most of the Central Government Debt (over 80%) is in the form of AF.4 liabilities.
2.2.1. Savings bonds
None.
2.2.2. Other
None.
3. Selling techniques
The Government has only once issued medium term bonds. These were five-year Eurobonds with a nominal value of 100 million EUR, issued in 2002. The bonds were issued at the slight discount. Credit Suisse was used as a mediator in the selling process.
4. Other information
4.1. Valuation of debt instruments
Nominal value.
4.2. Fiscal year
Calendar year.
4.3. Estimates
No estimates are used.
4.4. Maturity structure
Initial maturity.
4.5. Duration
At the moment we are not able to calculate durations for various debt instruments because of the lack of data.
The State Treasury handles government borrowing and debt management. The government borrowing is based on section 64 of the Constitution Act (section 82 as of March 1, 2000). This requires government borrowing to be based on parliamentary approval stating the maximum amount of new credit or central government debt according to the fiscal and economic projections contained in the state budget. When it presents its budget bill for each year, the government also makes a proposal to parliament for the borrowing authorizations it will need to balance the budget. These take effect when parliament has approved them.
The government decides on the maximum amount of new state borrowing and authorizes the State Treasury to make the necessary agreements. It also authorises the Ministry of Finance to issue the related instructions. The Ministry then compiles such instructions for the State Treasury, providing general guidelines for borrowing and debt management; it also monitors compliance.
The statistics included in this publication refer to the central government that comprises economic units belonging to state budgetary finances: ministries, state agencies, institutions, and extra-budgetary funds other than those principally engaged in business activities like state enterprises.
Historical series prior to 1990 are not available. In Table 5 of the chapter entitled "International comparisons", the figures refer to the total central government debt, not only to the marketable debt as stated in the table.
Treasury Bills are zero coupon instruments issued via daily tap issuance with maturities ranging from two weeks to 1 year. They are issued both in euros and in US dollars. The minimum amount is EUR 1 million. They are in the form of book-entries, usually with a value date of T + 2.
Commercial papers are not issued by the state; however, the Agriculture Intervention Fund has CP programs (up to 12 months) in domestic banks. The State Treasury executes transactions on behalf of the Agriculture Intervention Fund.
Short-term loans are taken on the financial markets in order to guarantee the liquidity in short-term cash balances. The loans are used mainly to balance the seasonal expenditure peaks in payment transactions and government cash investments.
2.1.2.1.1 Short-term bonds
Bonds with a remaining maturity of up to one year. The largest bulk of short-term bonds are bullet loans, on which the coupon is paid once a year.
2.1.2.1.2 Medium-term bonds
Bonds with a remaining maturity of one to five years. The largest bulk of medium-term bonds are bullet loans, on which the coupon is paid once a year.
2.1.2.1.3 Long-term bonds
Bonds with a remaining maturity of more than 5 years. The largest bulk of long-term bonds are bullet loans, on which the coupon is paid once a year.
None.
Bonds that have been originally issued as variable-rate notes.
None.
Yield bonds are aimed mainly at private investors. They are fixed-rate bullet-type loans on which interest is paid annually.
Loans from the European Investment Bank, private placements, direct loans from domestic public entities and direct loans from some other institutions.
Treasury Bills are mainly sold as direct sales to banks via what is called "the daily window". The State Treasury announces on a daily basis an indicative amount to be issued, pricing and maturity. However, the State Treasury may also issue Treasury Bills through auctions. Bonds are issued either in auctions or through bank syndicates. Primary dealers have the right to participate in bond auctions.
The outstanding debt is calculated at nominal value. However, the foreign ownership of the central government debt is calculated at market value. For this reason, the amount of foreign ownership is not directly comparable to the other debt figures. The statistics refer to the situation after currency swaps.
The fiscal year is the same as the calendar year.
There are no estimates in the tables.
Residual maturity.
Modified duration.
The institutional framework for central government debt issues is set forth in the Budget Act (Loi de finance), which is adopted by Parliament each year. The Budget Act authorizes the Minister for Economic Affairs and Finance to borrow funds to cover all of the government's needs for funding. The authorization is a blanket one, which sets no upper limit on debt gross issues. However, there is a ceiling for the increase of the net debt on the horizon of more than one year.
The government's debt and cash flow are managed by the Treasury and Economic Policy Directorate and within the Directorate by the Agence France Trésor.
The policy for issuing debt adheres to three principles that aim to promote harmonious development of a liquid, attractive and safe market for government securities, and to make market offerings as neutral as possible. These principles are product simplicity, liquidity of borrowings, and transparency and regularity of debt issues.
French government debt consists of three categories of standardised securities denominated in euro: fungible Treasury bonds (obligations assimilables du Trésor, OATs), Treasury notes (bons du Trésor et à intérêt annuel, BTANs) and Treasury bills (bons du Trésor à taux fixe et à intérêts précomptés, BTFs).
The liquidity of Treasury securities stems from a 1985 decision to opt for fungibility - a technique that makes newly issued securities indistinguishable from earlier issues featuring the same characteristics. It is a practice that enables substantial stocks of BTANs and OATs to be constituted, thus enhancing liquidity. The development since 1994 of a sale and repurchase market in Paris has also helped to increase this liquidity.
In order to make its issues more transparent, the Agence France Trésor floats them at regular auctions, and at the beginning of each year, it releases a provisional calendar of medium- and long-term government financing activities. In addition, on the Friday before each auction, the Agence France Trésor announces the terms of the forthcoming issue and a spread of the amount involved.
Since the end of 2007, in the particular context of the financial crisis and the turmoil that occurs on the financial markets, the Agence France Trésor has adapted many characteristics of its issuances to facilitate their flexibility and to better satisfy the demand. More precisely, the number of lines issued during auctions has been increased (securities off-the-run issued beside securities on-the-run); in addition, spreads of amounts involved announced by the Agence France Trésor have been extended.
Treasury bills (BTFs) are securities with initial maturities of one year or less. 3 months BTFs, along with 6 and 12-month bills, are issued every week, according to a quarterly calendar published in advance and specifying the maturities of the bills to be auctioned. A same 3 months BTF is issued consecutively two weeks. Since 2007, to better adjust supply and demand of securities, some BTFs with maturities of 3-, 6- or 12-months are regularly issued during weekly auctions.
None.
None.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
BTANs are securities with initial maturities of 2 or 5 years, issued at auction on the third Thursday of each month. The Agence France Trésor generally issues one line of 5-year BTANs every 6 months and one or two lines of 2-year BTANs per year.
2.1.2.1.3 Long-term bonds
OATs are the French government's main long-term borrowing instrument. These securities are issued with maturities of 7 to 50 years, generally by auction, according to an annual calendar published in advance.
Since 1998, the Agence France Trésor has been issuing French inflation-indexed securities (OATi). OATis have a fixed real coupon, and the principal is both guaranteed through redemption at par and protected against inflation thanks to an indexation to the daily French inflation index, which is calculated using an INSEE index of consumer prices excluding tobacco. There are six lines of OATis having different maturities: OATi 2009, OATi 2011, OATi 2013, OATi 2017, OATi 2023 and OATi 2029. Since October 2001, the Agence France Trésor issues six other lines of securities index-linked to consumer prices harmonized within euro zone (excluding tobacco) published by Eurostat, with different maturities: BTANei 2010, OATei 2012, OATei 2015, OATei 2020, OATei 2032 and OATei 2040.
In 1996, the Agence France Trésor has issued for the first time a floating-rate OATs indexed to the "TEC 10" index of long-term government bond yields. This index represents the yield-to-maturity of a fictitious OAT with a constant maturity of 10 years. Only one OATs like that has been issued: "The TEC 2009". It expired on 25 January 2009.
None.
Savings bonds include retail Treasury bills with a maturity of 5 years, although new issues of such bills were discontinued in 1999. They also include OATs for individual investors, although these are fungible with the OATs issued in the market, and their amounts are therefore included with figures for the marketable portion of the debt.
Non-marketable debt includes various government commitments, Treasury bills issued to international bodies, deposits by Treasury correspondents (local authorities, local public establishments, etc.) and individuals and some debts taken over.
Since 1985, the "bid price system" has been the principal method of issuing French government securities, with bank underwriting now used only in special circumstances, in particular for the first issuance of innovating financial products.
In a "bid price" auction, securities are sold at the price or effective rate tendered by the bidder, as opposed to the marginal price or rate. This type of auction is called a "multiple price, sealed bid auction". The highest bids are served first, followed by lower bids, until the amount desired by the Agence France Trésor has been reached. Thus, the participants pay different prices, corresponding exactly to their respective bids.
Any institution affiliated to Euroclear France (the clearinghouse) and holding an account with the Bank of France is eligible to bid. Participants to auctions transmit their bids to the Bank of France until a predefined limit hour. Then, the Bank of France forwards the bids received to the Agence France Trésor, preserving bidders' anonymity. The auction results are announced to bidders as soon as bids have been opened and the results displayed on the screens of specialised agencies. The time elapsed between the deadline for submitting bids and publication of the results has been cut to less than five minutes.
Actual value.
Is calendar year.
None.
Residual maturity.
Modified duration.
Data revision: In the current period (2010) the data have been revised for the years 2000 to 2009, including now also the debt of the special funds "German Unity Fund" ("Fonds Deutsche Einheit (FDE)") and the "European Recovery Program" (ERP) before its integration into the Federal debt in 2005 and 2007, respectively. The debt of the new funds "Financial Market Stabilization Fund" ("Finanzmarktstabilisierungsfonds" (FMS)) and "Investment and Redemption Funds" ("Investitions- und Tilgungsfonds" (ITF)), being established in 2008 and 2009, respectively, are also reflected in the data. Further, the current revision also concerns securities, which have become due, but have not yet been completely paid back to the creditors (referred to as residuals). These residuals are now also included in the reported Federal debt.
Legal basis of borrowing: Under article 115 of the German Constitution (Grundgesetz) raising loans to finance the Federal budget requires authorization for a specific amount under Federal legislation. Such authorization is provided for in the Budget Act to be passed each year by parliament. Additional authorization under a Supplementary Budget Act is required if further borrowing should prove to be necessary during a fiscal year.
Establishment of a debt management agency: In September 2000, the "Bundesrepublik Deutschland - Finanzagentur GmbH" (German Finance Agency), with a registered office in Frankfurt am Main, was set up. Its task is to carry out debt management operations and advise the Federal Government on the overall debt management strategy.
Involvement of the Deutsche Bundesbank in borrowing: The Deutsche Bundesbank acts as fiscal agent for the Federal Republic in debt management operations and advises the Federal Government. Auctions of government bonds are carried out by the Bundesbank through its electronic auction platform. Also, the Bundesbank oversees the clearing and settlement of securities and money market operations.
Debt registration and management: On 1 August 2006, the Federal Securities Administration which was formerly responsible for the registration of the loans, the running of the Federal Debt Register and the debt servicing was merged with the Finanzagentur with the intention to increase the efficiency of debt management.
Basic government debt management strategy: The overall debt management objective is to procure the volume of credit provided for in the budget plan on time, on market terms and on the broadest possible basis, thereby complying with the principles of cost-effectiveness. Within the framework of the restructured organization of the Federal debt management, the government cleared the way for the use of new financing instruments (e.g. swaps, foreign currency bonds or inflation-linked bonds) in order to increase the flexibility of debt management and to improve the debt portfolio.
Treasury discount paper (Unverzinsliche Schatzanweisungen,"Bubills") fall into the short-term maturity category. Bubills are launched with maturities of 6 months and, starting from 2009, 12 months. Bubills are issued by auction with bids offered on a yield basis. The amount set aside for secondary market operations is sold via electronic and telephone trading.
None.
None.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
Federal Treasury notes (Bundesschatzanweisungen, "Schätze") have a two-year maturity and are issued exclusively by auction. Each issue is usually tapped twice in the following two months. They are listed for dealing on the German stock exchanges. Interest is paid annually.
Five-year Federal notes (Bundesobligationen, "Bobls") have a maturity of 5 years and are likewise issued by auction only. Currently, three series of five-year Federal notes are issued per year. Each five-year Federal note is usually tapped twice. Bobls are listed for dealing on the German stock exchanges. Interest is paid annually.
Depending on the market environment, the Federal Government may from time to time also launch bonds with medium-term maturities and with a foreign currency denomination. So far, such bonds have only been denominated in US-dollars. Foreign currency bonds are issued through a banking consortium.
2.1.2.1.3 Long-term bonds
Federal bonds (Bundesanleihen, "Bunds") have maturities of 10 years and 30 years, respectively. They are issued by auction only and are usually tapped two to three times. Bunds are listed for dealing on the German stock exchanges. Interest is paid annually and coupons may be stripped.
Index-linked bonds (Inflationsindexierte Bundesanleihen und Bundesobligationen) are issued with 5- and 10-year maturities. Like nominal bonds they are issued by auction, with auction volumes being announced per quarter and auction dates being announced to the market short-term, at the suggestion of the Finanzagentur. Payments of coupon and principal are linked to the "Harmonized Index of Consumer Prices" in the Euro Zone - all items excluding tobacco. Interest is paid annually.
Federal savings notes (Bundesschatzbriefe) are tap issues of the Federal Government which are primarily intended for private investors. The range of purchasers is restricted to individuals and some domestic non-profit organizations. There are two types offered for sale. Type A has a six-year maturity with annual interest payments. Type B has a maturity of seven years; interest is accumulated together with compound interest. On maturity or premature return investors receive their capital at par together with the interest in a single sum. The special feature of Federal savings notes is that they yield interest at a rate which rises in accordance with a fixed schedule year by year. If market conditions change, the issue of the current series is discontinued and sales of new series (on market conditions) are started. Federal savings notes are not listed.
Federal Treasury financing paper (Finanzierungsschaetze) is issued on tap with maturities of 12 months and 24 months, respectively, at monthly intervals with changes in issue terms being possible daily if market conditions require so. Treasury financing paper is issued at a discount. The paper may be bought by anyone except credit institutions. It is not listed and may not be returned before maturity.
German Government Day-Bond (Tagesanleihe): In July 2008, the Federal Government extended the range of products for retail investors. The so-called German Government Day-Bond was introduced to the market. The bond combines the advantages of a Federal Security and an instant access savings account. It bears an unlimited maturity and can be ordered exclusively from the Finanzagentur.
Borrower's note loans (Schuldscheindarlehen) are loans granted against borrower's notes. Their terms can be tailored individually to meet the needs of the Federal Government and investors. They allow the Federal Government to react quickly to market opportunities that arise at short notice.
Other short-term debts ("Sonstige unterjährige Kreditaufnahme") are short-term liquidity credits assigned to the special funds FMS and ITF.
Other debts ("sonstige Schulden") comprise a variety of older (but still existent) non-standard debt positions like equalisation claims ("Ausgleichsforderungen" (AF)), debt of the Privatization and Restructuring Agency ("Altschulden der Treuhandanstalt (THA)) and foreign debt resulting from the London Debt Agreement (Auslandsschulden nach dem Londoner Schuldenabkommen). Due to technical restrictions, the securities included in "Other debt" are not taken into account in the calculation of maturity and duration (Table 3).
Federal bonds, five-year Federal notes, Federal Treasury notes and Treasury discount paper are issued by auction to the "Bund Issues Auction Group". Credit institutions, securities trading houses and securities trading banks which are resident in a member state of the European Union may become members of the group provided they have a certain minimum placing power. Bids have to be submitted under the Bundesbank's auction platform Bund Bidding System (BBS) which was introduced in April 2005. The issuer decides on the allocation based on the result of the bidding. All competitive bids above the accepted minimum price or below the maximum yield are allotted at the price or yield bid. Non-competitive bids are filled at the weighted average price or yield of the competitive bids accepted.
A portion of each issue is set aside for secondary market operations. The Finanzagentur and the Bundesbank gradually sell the amounts retained in the market through electronic trading, telephone trading and floor trading as part of their secondary market operations for Federal securities. In the case of Treasury discount paper, the amount set aside for secondary market operations is sold via electronic and telephone trading. The amount set aside for secondary market operations may be topped up later.
The US-Dollar denominated bonds issued by the Federal Government in 2005 and 2009, as well as the inaugural inflation-linked securities have been placed via syndicates of international banks.
Federal savings notes and Federal Treasury financing paper are sold through credit institutions as well as by the Finanzagentur directly. The recently established tap issue "German Government Day-Bond" can only be purchased from the Finanzagentur.
All instruments are shown at their nominal value with the exceptions of Treasury discount paper (Unverzinsliche Schatzanweisungen, "Bubills") and Federal Treasury financing paper (Finanzierungsschaetze), which are recorded at their discount value.
"Amounts outstanding" refers to the total issued volumes not reduced by own holdings.
Calendar year.
None.
The maturity structure of outstanding debt instruments and the related gross and net issues refers to initial maturity. Average term to maturity is based on residual maturity.
In order to be consistent with other publications of the Finanzagentur, the published average term to maturity also contains the hold-to-maturity swaps within the German Federal debt portfolio.
Because of the continuous compounding method used for the valuation of the instruments, Macaulay and Modified Duration are the same. Thus, to avoid confusion, the Macaulay Duration is intentionally left empty.
In order to be consistent with other publications of the Finanzagentur, the provided Modified Duration also contains the hold-to-maturity swaps within the German Federal debt portfolio. Modified Duration of the foreign debt considers also the currency swaps used to hedge the foreign currency risk.
Greece's Public Debt is the responsibility of two Units operating under the supervision of the Minister of Finance.
A. The Public Debt Directorate operates under the General Directorate of Fiscal Policy of the Ministry of Finance. Its main task is the monitoring of Public Debt not only in terms of recording and servicing but notably as a parameter for implementing fiscal policy.
In this context, the Public Debt Directorate:
a) making forecasts and evaluations of the evolution of debt;
b) servicing the public debt;
c) elaborating monthly and annual reports on debt according to the national and European accounting system (ESA95);
d) producing broad statistical information towards state or supranational organizations and pub-lishing periodical reports and bulletins.
B. The Public Debt Management Agency (PDMA) was established in 1999 as a public entity under the direct supervision of the Minister of Economy and Finance having as a main task the management of the public debt portfolio, and specifically the objectives of:
i) covering the financing needs of the state through the markets;
ii) reducing the servicing cost of the debt;
iii) reducing the assumed market risks by pursuing an optimal composition and duration of the debt portfolio.
In pursuing these objectives, the Public Debt Management Agency (PDMA):
Both Units are in close co-operation.
They are euro-denominated securities in book-entry form, issued at discount, with tenors of 13, 26 and 52 weeks. These securities are traded in the regulated secondary market (HDAT). Banks, institutional and retail investors constitute the investor base. In 2010 T-bill issuance constituted the major part of short term financing reaching the total outstanding amount of € 9.4 billion in 31/12/2010...
It is used for temporary and unexpected financing of the State Cash Balances, as a Cash Management instrument. They are discounted, book-entry notes denominated in Euro, USD and GBP with tenors ranging from 1 day to 365 days and redeemed at par or at an amount calculated by reference to an index or a formula. They are traded in a regulated secondary market and cleared by Euroclear system or Clearstream Banking or any other recognised clearing system.
None.
Fixed rate benchmark bonds are euro-denominated securities issued in book-entry form, with tenors of 3, 5, 10, 15 and 30 years. They are initially issued through syndication (except for the 3 year and the 5 year bond, which may also be issued through auction) and further tapped via auctions in order to enhance liquidity.
They bear annual coupons and are redeemed at par at maturity.
In the first four-month of 2010, short & medium-term bonds were mainly issued for a total amount of € 18 billion. The longest term issued was the 20 year re-opening for amount € 390 million. On 23/04/2010, due to a rapid increase in its debt financing, Greece requested the activation of EU/IMF financial stabilization mechanism (EFSM). Greece received approximately € 31.8 billion loan disbursements throughout 2010.
Greece's presence in the index linked-bond market dates back in 2003 when a euro-denominated 20 year inflation linked bond, due July 2025, was launched. The bond was linked (in terms of principal and interest) to the European Harmonised Index of Consumer Prices (HICP), excluding tobacco, published by Eurostat and calculated by using an Index Ratio. The principal value is fully guaranteed, while income on redemption in excess of the principal value, earned from the principal adjustment due to the evolution of inflation index, is tax exempted. In 2006, this issue reached the amount of € 7.2 billion. In 2007 Greece launched a new euro-denominated inflation linked-bond, due July 2030, with initial amount € 3.5 billion which was further tapped in 2008 reaching the total outstanding amount of € 7.5 billion. There was not any new issue or re-opening of inflation linked bond in 2010.
Strategic Issues/Private Placements are undertaken on a supplementary basis and represent a lower percentage of the total annual issuance. Such issues allow the Hellenic Republic to differentiate the investor base, to take advantage of demand for specific structures and finally to maintain its presence in some non euro-zone currency markets (such as CHF and USD currencies). They usually take the form of privately placed Floaters or Structured transactions. At the beginning of 2010, a new 5-year floating rate note, due in February 2015, was issued through Private Placement for an amount of € 2.02 billion. After the activation of the European Financial Stabilization Mechanism (EFSM), there were no other issuances in this category.
None.
None.
Bank of Greece loans/ Special purpose & bilateral loans / EFSM loans /other domestic & external loans.
During 2010, there was a remarkable increase of non-marketable debt due to:
a) EFSM loans (€ 31.8 billion);
b) off-market swap with Goldman Sachs reclassification according to ESA95 (€ 5.2 billion) and;
c) debt assumption of ELGA & OPEKEPE by Ministry of Finance (€ 3.2 billion).
Techniques used for issuing and placing securities are the following:
Auctions: This issuance technique is mostly used for issuing short term bonds and T-bills and subsequently for re-opening of longer maturities of fixed rate bonds initially issued through syndication. Only the appointed Primary Dealers are allowed to participate in the auctions submitting both competitive and non-competitive bids. From 1/1/2009 all auctions are of the competitive/cut off price type, according to the modification of the Primary Dealers Operation Regulation.
Auctions are conducted through the Electronic Trading System (HDAT) and are announced on the issuance calendar.
Auctions are taking place on Tuesdays (usually once a month). The settlement date for both the primary and secondary market is three days after the trade date (T+3).
Syndication: This bond issuance technique is used for the initial issuance of medium and long term bonds as well as for inflation-linked bonds.
Apart from achieving benchmark status at issue, syndicated issues facilitate control of initial allocation with high priority to long-term holders such as insurance companies, pension funds, etc.
Public Subscription: This technique has been introduced in both T-bills and bonds auctions, so that retail investors can directly have access to government securities at the cut off price of the auction for a pre-defined amount per investor. Retail investors can additionally buy an unlimited amount within five days after the auction but at the price offered by the banks. Government securities acquired by retail investors in the ways described above are tax-exempt, if kept till maturity.
Secondary Market: Important steps were taken in the Electronic Secondary Market (HDAT) to eliminate defective transactions, as well as trade cancellations due to technical faults.
EuroMTS: Greek Benchmark Bonds (over € 5 bln per benchmark) are also traded in the EuroMTS. Currently, 24 government bond series are traded in this platform.
Primary Dealers are appointed and evaluated by the Committee for Supervision and Regulation at the end of each year, according to the PDs Operation Regulation.
There are 22 institutions acting as Primary Dealers for government debt, of which five are local and the rest international.
According to the Regulation, Primary Dealers (PDs) must participate in each of the primary and secondary market by a percentage of at least 2% of the total volume of transactions, weighted by duration.
Furthermore final actions have been taken in PDs reports harmonization. The reports which will be submitted uniformly by all PDs across the euro area will include all transactions (buy and sell) of government bonds in the primary and secondary market, broken down by type of counterparty, location and instrument.
Nominal value (including swap transactions).
Calendar year.
None.
Residual Maturity.
Both Duration and Modified Duration are calculated for government bonds and bills only, not including swaps.
In Hungary, the Government Debt Management Agency Pte. Ltd. (Államadósság Kezelo Központ Zrt., hereinafter: ÁKK Zrt. or ÁKK) is responsible for debt management. ÁKK Zrt. is 100% state owned and the Minister Responsible for Public Finances (being the Minister for National Economy) exercises the shareholders' rights.
ÁKK is responsible for all debt management related functions. The legal framework of ÁKK's operations is based on several acts. The Act on Public Finances, the annual Budget Acts and the Civil Code empower the Minister Responsible for Public Finances to manage the government debt. The Minister Responsible for Public Finances manages public debt through ÁKK under the regulations of the Public Finances Act.
The Public Finances Act gives the responsibility to the Minister Responsible for Public Finances to execute financing and government debt management functions through ÁKK Zrt.. The following authorisation is given under Section 113/A of the Public Finances Act:
1. The Minister Responsible for Public Finances through ÁKK Zrt.:
i) On the basis of the annual Budget Act and with taking into account the forecast rendered in subsection p) of paragraph (1) of section 18/B ensures the solvency of the central government budget;
ii) Ensures that the central government deficit and debt redemption are financed, and the government debt and the temporarily liquid funds of the state are properly managed;
iii) Records the central government debt.
2. In executing the above duties, ÁKK Zrt.:
i) Develops the central government debt management strategy and elaborates the annual and medium-term financing plan of the central government;
ii) Raises loans and issues government securities in compliance with the annual Budget Act and organises debt assumptions from public institutions to the state;
iii) Effects central government debt redemption;
iv) Organises the secondary market of government securities;
v) Executes secondary market security dealings on own account, lends government securities, executes repo transactions, in performing debt management duties concludes prompt, forward, hedging, swap and other derivative transactions and carries out deposit management and custodial tasks;
vi) Prepares analyses on government debt service and securities market developments;
vii) Provides information on the status of public debt and on government securities market developments;
viii) Upon a separate authorisation by law, may perform advisory and management tasks related to the issuance of government guaranteed debt securities;
ix) Reviews the conditions of loans and bonds issued under individual state guarantees;
x) Performs credit and deposit transactions;
xi) Participates in tasks related to loan and credit agreements and to the issuance of debt securities guaranteed by the state;
xii) May participate in the issuance and management of loans, credit agreements and debt securities of companies in state majority ownership, including advisory services of business strategy.
From 2009, the Minister Responsible for Public Finances through ÁKK Zrt. may provide loans to commercial banks (credit institutions) in case of the presence of danger of potential financial instability.
To implement these tasks, the Public Finances Act authorises ÁKK Zrt. to execute certain investment services and activities, and to provide certain ancillary services within the above detailed tasks of government debt management.
Within the reform of the central budget subsystems, the Parliament amended the relevant provisions of Act No. XXXVIII of 1992 (the Public Finances Act), creating legal grounds for the dissolution of the Government Debt Management Agency (ÁKK) as a budgetary body (a body closely linked to the Hungarian State Treasury) and the simultaneous incorporation of Government Debt Management Agency Pte. Ltd. (ÁKK Zrt.) as a legal successor of the former organization.
A single shareholder corporation in the 100% ownership of the Hungarian state, ÁKK Zrt. started to operate on 1 March 2001. The shareholder's rights are exercised directly by the Minister Responsible for Public Finances. Accordingly, the Minister Responsible for Public Finances who exercises the Founder's rights disposes of special authority in the management of government debt, such as the approval of the government debt management strategy, the financing plan providing for the continuous performance of debt management operations, and of the benchmarks applicable to debt management.
All other strategic and main decisions concerning debt management are made by the Board of Directors of ÁKK Zrt. The members of the Board of Directors are senior officials of the Ministry for National Economy.
Control over ÁKK Zrt.'s operations and financial management is exercised by the appointed certified auditor and a Supervisory Board consisting of three to five members.
Discount Treasury Bills are government securities with maturity of less than one year. No interest is paid on these securities. Instead, they are issued at a discount, i.e. at a price lower than the face value of the security, and the face value is repaid on redemption date. The difference between the face value and the purchase price is the discount.
Currently, Discount Treasury Bills are issued for two benchmark maturities, namely 3 and 12 months. In the case of 12 months, the actual term-to-maturity differs due to the reopening of the series, but it is close to the benchmark tenor. ÁKK Zrt. also issues so-called Liquidity Discount Treasury Bills, by reopening an earlier 3-month Discount T-bill series with a term-to-maturity of generally 6 weeks.
Since 1988 Discount Treasury Bills have been issued at auctions. At present, auctions of 3-month Discount Treasury Bills are held on Tuesdays every week and 12-month bills on Thursdays of every even numbered week (bi-weekly). Liquidity Discount Treasury Bills auctions are held on Mondays depending on actual short term liquidity needs of the Single Treasury Account. The day of financial settlement and transfer of ownership is the Wednesday of the week following the week of the respective auction for the 3 and 12-month Discount Treasury Bills. Liquidity Discount T-bills are settled on the first Wednesday after the auction. The redemption dates of Discount Treasury Bills also fall on Wednesdays. The offering amount of Discount Treasury Bills at each auction is determined in line with the funding plan and the liquidity situation of the Single Treasury Account. 6-month Discount Treasury bills were issued until June 2008 and the outstanding amount of this tenor matured by the end of 2008.
The denomination of Discount Treasury Bills is HUF 10,000. Discount Treasury Bills are issued in dematerialised form and are registered securities.
The 12-month Discount Treasury Bills are listed on the Budapest Stock Exchange (BSE) on the day of financial settlement. Each series is sold at four successive auctions (by re-opening) and each issue is automatically listed on the BSE.
Discount Treasury Bills may be purchased by and can be freely traded among resident and non-resident natural and legal persons, and also non-incorporated economic associations up to maturity. On the primary market, Discount Treasury Bills are sold directly only to primary dealers, while investors may purchase these securities by giving orders to primary dealers.
Discount Treasury Bills can be obtained on the secondary market, amongst others, from primary dealers or in the branch network of the Treasury.
None.
None.
The Hungarian government bond is an interest-bearing government security with a maturity longer than 1 year. Currently, it is issued for four benchmark maturities, namely 3 years, 5 years, 10 years and 15 years.
The first auction of the 3-year fixed rate bond was on 2 May 1996. The 5-year fixed rate bond was auctioned for the first time on 30 January 1997, the 10-year fixed rate bond on 14 January 1999, while the 15-year fixed rate bond was introduced on 8 November 2001.
The coupon of fixed rate government bonds is announced and fixed one week prior to the first auction date of the given bond series.
The 7-year index-linked government bond was issued for the first time on 7 May 1998 and matured in March 2005. The principal of the index-linked bond was annually adjusted by the consumer price index, in addition to which a pre-determined, fixed real coupon was paid. The index-linked bond did not fulfill the expectations, attracting weak demand and its turnover in the secondary market was negligible, therefore its sale had been ceased in 1999. A new inflation-linked security, Premium Treasury bond was introduced as a retail bond in 2009 (see 2.2.1 Savings bonds).
The first auction of the five-year floating rate bond was on 19 March 1998. For floating rate bonds, only the method and date of coupon re-set are determined in advance and the coupon rate is announced only for the given interest period. The coupon rate of this floating rate government bond was linked to the average auction yields of 6-month Discount Treasury bills. These types of bonds were not auctioned from 2001; the last one matured in 2005. On 31 March 2010, ÁKK Zrt. issued a new 5-year variable-rate note which pays interest semi-annually and its coupon is linked to the yield of the 3-month Discount Treasury bills. Variable rate notes are sold at auctions which are held once a month on Thursday together with the 12-month Discount Treasury bill.
The interest rate of 7-year floating rate government bonds, which were issued for the first time on 17 October 1996 and two additional series were issued until 1997, was determined semi-annually based on the consumer price index plus a fixed real interest rate, while interest was paid on an annual basis. These types of bonds are no longer auctioned and the last series of this bond matured in 2004.
The coupon payment frequency of Hungarian government bonds is annual or semi-annual. Fixed-rate Government bonds issued after 2001 pay interest annually.
Government bonds are sold through either public issues or private placements. Government securities issued through private placement usually served special funding purposes, while the purpose of placement pre-determined the group of investors to which the government security was sold. Examples of such bonds include bank, loan or debtor consolidation bonds intended to improve the solvency ratio and financial strength of banks. Nowadays, the share of privately placed government bonds is small and continuously declining, all securities are sold through public offerings.
Hungarian government bonds have been sold through auctions since 1996. The auctions are held on the Thursday of every second week. The tenor of the offered bonds are announced a week before the auction after consultation with Primary dealers, however at the end of 2010, normally three tenors (3, 5 and 10-year fixed rate) are offered at all auctions and the 15 year tenor may occasionally replace the 10 year bond. The 5-year floating rate note is auctioned once a month with the 12-month Discount T-bill. From 2009 the flexibility of bond issuance was increased also by the introduction of after auction non-competitive top-up phase in the afternoon of the auction day where Primary dealers with winning competitive bids at the auction can buy additional amounts of the bonds at the average yield. As a reaction to declining demand for Treasury bonds during the international financial crisis ÁKK temporarily suspended bond auction in October 2008. Provided the stabilisation of the Treasury bond market in Hungary ÁKK reintroduced regular issuance according to the stable calendar in Q2 2009.
The denomination of the Hungarian government bond is HUF 10,000. Hungarian government bonds are issued in dematerialised form and are registered securities. Hungarian government bonds are listed on the Budapest Stock Exchange as from the issue date. They may be purchased by and can be freely traded among resident and non-resident natural and legal persons, and also non-incorporated economic associations up to their maturity.
Only primary dealers have the right to buy Hungarian government bonds directly at auctions, while investors must give an order to primary dealers. The secondary market trade of government bonds takes place among others, through primary dealers or the branch offices of the Treasury.
Since 1999, ÁKK Zrt., acting on behalf of the Republic of Hungary, has been raising funds in foreign currency directly from the international capital markets.
Since 1999, 27 series of foreign currency bonds were issued up to 2010. The majority of the Republic's foreign currency bonds are fixed rate securities; they are denominated in euro and have a 5-15 year tenor. The volume of total annual issuance was between EUR 0 and 4 billion. Non-euro issues are swapped into euros in order to maintain the benchmark for the currency composition of the foreign exchange debt (currently 100% euro).
These bonds were issued in dematerialised form and most of them are listed on a stock exchange (mainly in London and Luxembourg) as from the issue date.
This category includes all retail government securities, those with a 1-year tenor as well.
Treasury Savings Bonds were bearer form, fixed, step-up rate[1] government securities with a tenor of 3 years and 2 months and were redeemable before maturity. Interest was paid at maturity; or if the security was redeemed before maturity, investors received the amount of interest together with the principal on the sale date. Treasury Savings Bonds were placed for the first time on 29 June 1998 and were ceased in May 2001. The last series matured in May 2004.
Interest Bearing Treasury Bills are fixed rate government securities with a tenor of 1 year. Interest is paid at maturity; investors receive the amount of interest together with the principal.
Interest Bearing Treasury Bills were issued for the first time in 1988. These securities are offered for sale continuously during one-week subscription periods, so that the capital and the interest can be easily reinvested at redemption. Currently, Interest Bearing Treasury Bills are available at par during the whole subscription the period. Interest is accrued only from the issue date, which falls on the week following the closing date of the subscription period.
The denomination of Interest Bearing Treasury Bills is HUF 10,000. Interest Bearing Treasury Bills are in dematerialised form and are registered securities. They are available to resident individuals, legal entities and non-incorporated economic associations who may trade them until maturity.
Interest Bearing Treasury Bills can be bought on the primary market from the primary dealers that have signed a special contract for the sale of retail government securities with ÁKK Zrt. and also in the branch network of the State Treasury. These securities can be sold on the secondary market to retail primary dealers and to the branch network of the State Treasury. Retail primary dealers and the branch network of the State Treasury quote only bid prices for these securities in order to encourage investors to purchase them through subscription on the primary market.
Treasury Savings Bills are registered securities, which can be bought by resident individuals in the branch network of the Hungarian Postal Service. They exist in printed form only, with denominations of HUF 10,000; 50,000; 100,000; 500,000 and HUF 1 million with a tenor of 1 and 2 years. Treasury Savings Bills were issued for the first time on 1 April 1995. Since then, these securities are distributed through some 2,800 post offices.
Premium Treasury bond: In 2009 ÁKK issued a 3-year index-linked bond for the retail sector. On 8 December 2010, the 5-year index-linked bond was also issued. The interest is linked to the consumer price index plus some premium (real interest) above it. The Premium Treasury bond is sold only in the branch network of the State Treasury; the bond is dematerialised and has a denomination of HUF 1,000.
This item includes all the loans that are extended to or have been assumed by the Hungarian government. The loans were given by commercial banks, by the National Bank of Hungary (NBH - the Hungarian Central Bank) by International Financial Institutions (IFIs) including the IMF and by the European Commission or were assumed from companies owned by the state or local governments. As a result of the debt swap transaction between the National bank of Hungary (NBH) and the central government in 1997, foreign exchange loans were granted by the NBH to the central government, each of them mirroring one of the 39 foreign exchange bonds previously issued by the NBH. This single loan amount decreased continuously due to the redemption of its elements. This loan was fully repaid by December 2007.
The auction technique has been used for selling Discount Treasury Bills since as early as 1988. It has become a regular issuing technique for Hungarian government bonds since March 1996. As auctions became more widespread, the transparency of the primary market improved since the yield levels and offering amounts were easy to monitor, and the prices were evolving through competitive bidding at the auctions. Due to the flexibility of the method and its competitive nature, it allows the government to easily adapt to the market even under rapidly changing circumstances, and ensures efficient distribution of the securities sold among investors.
Hungarian government securities are sold at discriminatory price auctions, i.e. each bidder pays the price of its bid at the auctions. The auction calendar as per instrument type is fixed for the whole given calendar year, however, the final details (the series, offered amount etc.) of the Hungarian Government Bond and Discount Treasury Bill auctions are announced by ÁKK Zrt. 5 days before the auction. Pursuant to the effective regulations, only primary dealers have the right to submit bids directly at the auctions of government securities. Investors need to give orders to primary dealers to purchase government securities at the auctions on their behalf.
Each bid may be submitted for government securities of a minimum nominal value of HUF 1 million. If the total amount of bids reaches or exceeds the offering amount at the auction, each bidder's bids are taken into account up to 50 per cent of the offering amount.
Bidders are considered single bidder if a bidder owns directly or indirectly more than 10 per cent of another bidder, or if two or more bidders are more than 50 per cent owned (directly or indirectly) by the same entity (other than the government).
Each bidder may also submit non-competitive bids without stating price or yield rate. The minimum amount of non-competitive bids is HUF 1 million at par and the maximum amount equals to HUF 200 million at par if the announced auction amount is no more than HUF 41 billion and HUF 500 million at par if the announced auction amount is more than HUF 41 billion. Non-competitive bids are bids to purchase securities at the average yield rate or price of awards to competitive bidders. In the afternoon of the auction day successful bidders can buy an additional amount (up to 40 per cent of their accepted competitive bids) of the bonds at the average yield during the non-competitive top-up phase of the Treasury bond auctions from 2009.
Auction bids must be delivered via the auction function of the automated trading system (MMTS) operated by the Budapest Stock Exchange (BSE) before 11 a.m. The auction results are announced at 11:30 a.m.[2]
Interest Bearing Treasury Bills are sold through subscriptions. They are offered for sale continuously during successive one-week subscription periods, and are available at par.
The security can be subscribed at primary dealers[3] and in the branch network of the State Treasury.
The primary objective of subscription is to satisfy small investors' demand. This objective was taken into account in formulating the principles of allocation, in accordance with which the subscriptions of resident individuals up to a nominal value of HUF 10 million are accepted first.
If the sum of such subscriptions exceeds the amount offered for subscription, the subscriptions may be either fully accepted or allocated based on "proportional distribution" up to the offering amount. The terms and conditions of the coming Interest Bearing Treasury Bill series and its subscription are disseminated in a public offer published on the Wednesday of the week before the subscription.
Treasury Savings Bills are issued through continuous sales. These government securities are available to investors at any time. The maturity of the Treasury Savings Bill is one year, while the maturity of the Treasury Savings Bill II (a government bond) is two years. Interest on these securities starts accruing on the day of their purchase and does not accrue after the maturity date. The amount of interest payable on redemption is calculated based on the public offer effective on the date of purchase. The issuer offers a pre-determined amount of securities, and that amount is available on a continuous basis until fully sold. A new series of the same security is launched if necessary. These securities are available in 2,800 post offices of the Hungarian Postal Service.
Debt instruments are valued at nominal value, with the exception of Discount Treasury Bills (under 2.1.1.1 in the tables) that are valued at average weighted issue price and index linked bonds that are valued with capital uplift.
Foreign currency debt instruments are valued together with the corresponding cross-currency swaps.
The net issuance figures given are net changes in the stock of the given debt elements from previous year to the current year. This also includes the change in value resulting from the movement of the exchange rates in the case of foreign currency debt elements and other changes such as debt assumptions.
Equals to the calendar year.
None.
Residual maturity, except for short-term bonds.
The calculation of duration follows the classical Macaulay method, with the difference that in the case of floating rate debt the duration of the debt element equals the remaining time to the next interest re-fixing. The yield curve used is calculated from the daily price quotation of primary dealers for discounts Treasury bills and government bonds by applying the spline methodology. Duration of every HUF debt instrument is calculated and then aggregated by weighted average using the market value of the instruments as weights. Average maturity is the weighted average of the term-to-maturity of the separate debt instruments.
The duration and the average maturity of the HUF and non-HUF portfolios are calculated separately; total debt duration and average maturity are the weighted average of the duration and average maturity of the two portfolios, using the volume of the portfolios as weights. In this case, both debt portfolios are recorded at nominal value (except discount T-bills, where average sale price is used).
[1] Step-up rate: upon redemption of the security before maturity the investor receives a pre-determined interest amount increasing progressively with the time elapsed from the purchase date of the instrument.[2]. Hungarian Government Bond auctions: Reuters HUAUCTION02 page; Discount Treasury Bills auctions: Reuters HUAUCTION01 page, Bloomberg code: GDMA, ÁKK Zrt.'s website: www.akk.hu.
[3]. Primary dealers that have signed a special contract for the sale of retail government securities with ÁKK Zrt.Central bank of Iceland and State Accounting Office.
Further information is available on the Central bank of Iceland, Government Debt Management, Web site http://www.sedlabanki.is/ and also at http://www.bonds.is/ and http://www.ndma.is/.
It is the Government Debt Management at the Central Bank of Iceland that manages the central government debt on behalf of the Ministry of Finance. The central government debt comprises the domestic and foreign central-government debt. Government Debt Management also manages the State Guarantee Fund. The Minister of Finance assigned issuance of domestic marketable securities to the Central Bank of Iceland, as well as the Treasury's foreign borrowing.
In an agreement between the Ministry of Finance and the Central Bank of Iceland, the division of responsibilities between the two parties is spelled out. The Minister of Finance holds the overall responsibility for the central-government debt and borrowing. The actual management of the central-government debt is carried out by the Government Debt Management at the Central Bank of Iceland on behalf of the Ministry of Finance. The aim is to reduce possible conflict between monetary policy of the Central Bank and efficient management of Treasury debt.
The objective of the government debt policy is to cover the central government's financing requirement at the lowest possible long-term borrowing costs, subject to a prudent degree of risk. Furthermore, the aim is to support an efficient and robust domestic financial market and to facilitate the central government's access to the financial markets in the longer term.
Treasury bills are short term instruments with 3 to 6 months maturity. T-Bills are sold through auctions that are held every month and are structured as a single-price auctions, i.e. the lowest accepted price (highest yield) will determine the selling price. Only Primary Dealers in Treasury Securities are authorized to submit bids in T-Bills auctions. Outstanding are 4 T-bill issues.
None.
There are outstanding eight T-Bond series in the domestic market; seven are benchmark T-Bond series. Maturities at date of issuance range from 2 to 15 years. T-Bonds are sold through auctions that are two times each month and are structured as a single-price auctions, i.e. the lowest accepted price (highest yield) will determine the selling price. Only Primary Dealers in Treasury Securities are authorized to submit bids in T-Bonds auctions.
Foreign borrowing includes loans raised through Euro Medium-term Notes programme.
2.1.2.1.1 Short-term bonds
Domestic Bonds and foreign currency denominated loans with maturity less than 1 year.
2.1.2.1.2 Medium-term bonds
Domestic Bonds and foreign currency denominated loans with maturity longer than 1 year but less that 5 years.
2.1.2.1.3 Long-term bonds
Domestic Bonds and foreign currency denominated loans with maturity longer than 5 years.
Bullet type bonds, denominated in Icelandic krona, with a single coupon capitalizing at final maturity or a yearly coupon payment. Indexed against monthly or daily changes in CPI. Currently two index-linked bond series are outstanding; one is a benchmark series with maturity in 2021.
Floating rate bonds issued in foreign currency and syndicated loans with foreign banks.
None.
None.
Government debt due to the National Power Company (Landsvirkjun); and the Central Bank of Iceland for recapitalization.
Loans from the Nordic Countries (Sweden, Norway, Denmark and Finland) that are part of the IMF restructuring program.
Securities denominated in Icelandic krona are sold through auctions via a primary dealer system. A single price auction structure is used where the lowest price (highest yield) determines the selling price of the auction. T-bonds are issued twice every month and T-bills are issued monthly. T-bills are issued in 4 month series. T-Bonds denominated in domestic currency have maturity ranging from 2 to 15 years. Bonds denominated in foreign currencies are privately placed or issued by syndication of foreign financial institutions.
The fiscal year is the calendar year.
None.
Residual maturity.
Macaulay and Modified Duration.
The National Treasury Management Agency (NTMA) manages assets and liabilities on behalf of the Irish Government. It was established at the end of 1990 to borrow for the Exchequer and manage the National Debt. Since then, its remit has been expanded greatly and now includes the management of the National Pensions Reserve Fund (as agent for the NPRF Commission), the National Development Finance Agency and the State Claims Agency.
The NTMA also manages other Government funds such as the Social Insurance Fund and the Dormant Accounts Fund and it borrows on behalf of the Housing Finance Agency. In addition, it operates a Central Treasury Service for health, education and local government authorities. It acts as Ireland's agent for the purchase of carbon credits.
The Exchequer Note programme provides short-term funding directly from wholesale institutional clients. The available maturities range up to one year. Exchequer Notes are issued on a discount basis in line with commercial paper.
Treasury Bills were launched in March 2009 and carry maturities of up to one year. They are offered by an auction process to Primary Dealers and other eligible counterparties.
Ireland has a USD 50 billion multi-currency Euro Commercial Paper (ECP) Programme which is listed on the Irish Stock Exchange. This programme, which provides funds at attractive levels, significantly below EURIBOR, is used as bridging finance in the replacement of longer term debt and for other liquidity management purposes.
US Commercial Paper Programme- Ireland established a new US Commercial Paper (USCP) programme in 2009. Funds are raised within the United States, in US dollars, and are swapped into euro. This programme adds to the diversified sources of short-term funds raised by Ireland.
Section 69 Notes. These notes are issued under the provisions of Section 69 of the Finance Act of Ireland, 1985 and are designed to provide investment opportunities to foreign owned companies located in Ireland.
The NTMA issues euro denominated fixed rate bonds. Issuance is concentrated in benchmark bonds with maturities in 2011, 2012, 2013, 2014, 2016, 2018, 2019, 2020 and 2025. The amount in issue in these bonds is augmented through the periodic issue of additional fungible tranches by auctions. Irish Government bonds are listed and traded on the Irish Stock exchange. The clearing and settlement system of Irish Government bonds is carried out by Euroclear.
The National Debt also includes a small amount of foreign currency bonds (which for the most part have been swapped into euro) and euro legacy currency bonds issued before the introduction of the single currency at the beginning of 1999. As this former foreign currency debt matures, it is refinanced in euro or repaid. When opportunities arise, this debt is also bought back on the open market by the NTMA and cancelled.
2.1.2.1.1 Short-term bonds
Instruments with a maturity of up to 1 year.
2.1.2.1.2 Medium-term bonds
Instruments with a maturity of 1 to 5 years.
2.1.2.1.3 Long-term bonds
Instruments with a maturity of more than 5 years.
The NTMA does not currently issue index-linked bonds.
The NTMA does not currently issue variable-rate notes.
None.
The following personal savings schemes are sold by the Post Office (An Post) on behalf of the NTMA:
Savings Certificates, Savings Bonds, Installment Savings, Prize Bonds.
While these instruments have maturities ranging from 3 months to 10 years, they are repayable on demand. Investments in these schemes totaled €10.3 billion at end 2010.
The balances on certain accounts under the control of the Minister for Finance may also be invested with the Exchequer on a short-term basis from time to time.
Exchequer Notes and commercial paper are sold by the NTMA through a daily "window" at the request of the investors or to meet Ireland's funding requirements.
Treasury Bills are sold by competitive auction followed by a non-competitive auction.
Irish government bonds are normally sold through auctions that are restricted to recognized Primary Dealers. The bonds are sold on to the wider Secondary Market by the Primary Dealers.
Nominal value.
Same as calendar year.
None.
Residual maturity.
The data on the domestic debt are provided by the Government Debt Management Unit (GDMU) of the Ministry of Finance.
The source of the data for the external debt is the Bank of Israel (the central bank).1. Introduction
The Government Debt Management Unit (GDMU), an office of the Ministry of Finance, is in charge of managing Israel's domestic and external debt and the development and implementation of an overall debt management strategy.
In this context, the unit is responsible for:
- issuing tradable government bonds in Israel's domestic market and raising capital in international markets;
- initiating and promoting reforms and structural changes in the Israeli capital market, in particular the secondary government bond market;
- constantly studying and monitoring global capital markets;
- providing information to the international rating agencies;
- cooperating with the Development Corporation for Israel (the Israel Bonds Organization);
- managing other countries' debts to Israel through the "Paris Club."
The GDMU was established in January 2002, by merging the Foreign Exchange Transaction Department, part of the Division of the Accountant General, with several sections of the Capital Market Department at the Capital Market, Insurance, and Saving Division.
Until the GDMU was established, the Foreign Exchange Transaction Department had been responsible for the management of the government's external debt and the Capital Market Department had been in charge of managing the domestic debt.
The two units were merged to improve the management of government debt by gathering all relevant policymaking bodies into a single unit, so that the cumulative insight of all concerned would improve the coordination of the two aspects of debt management.
Other reasons for setting up the GDMU were the favorable experience of similar units in many advanced economies and the recommendations of the International Monetary Fund (IMF), the World Bank, and the Organization for Economic Cooperation and Development (OECD). The GDMU is comprised of three departments that correspond to its main activities: the Domestic Debt Management Department, the Foreign Debt Management and Foreign Exchange Transactions Department, and the Risk Management Department. The GDMU works closely with the New York office of the Ministry of Finance and the Development Corporation for Israel (the Bonds Organization), which raises a large share of the government's external debt.
2. Description of debt instruments
2.1 Marketable debt
2.1.1 Money Market Instruments
None.
2.1.1.2 Commercial papers
None.
Domestic
The regulations defining the features of each bond stipulate the bond's indexation structure (principal and interest), the type of interest paid (fixed or floating rate), the issue term offered, and the dates of payment of principal and interest.
The regulations give the Ministry of Finance a certain degree of freedom in determining the term to maturity and the size and timing of the issuance of each series. All sub-series of a specific series are traded together as a single series. Each series is issued on a current basis over the course of several months. A new sub-series complements the sub-series that have already been issued and is combined with them to form a single series.
The bonds pay interest from the date of issue of the first sub-series. Therefore, subsequent subsidies are credited with an accrual of interest, as reflected in the auction price and the market price.
External
Prior to the year 2006 all of the bonds were managed by the Bank of Israel. Since 2006 the bonds are managed by the Ministry of Finance.
2.1.2.1 Fixed rate income instruments
Domestic
Shahar: A non indexed bond bearing a fixed annual interest rate and issued to a term of up to 20 years ("Plain Vanilla"). The interest paid is the nominal value of the bond multiplied by the annual interest rate.
The Shahar bond was first issued in August 1995 for a two-year term. Currently, it is issued for periods of five, seven, and ten years. The Shahar is now the most traded bond in the security market.
External
The State of Israel's debt in foreign currency is divided into the following two types:
- Bonds backed by U.S. government guarantees.
- Tradable bonds issued in world markets without guarantees ("sovereign issuances").
2.1.2.2 Index-linked bonds
Galil: An indexed bond that can be issued for a term of 2 to 30 years at a fixed annual rate.
The interest rate is the weighted average of all CPI-indexed fixed-rate bonds in circulation. Interest is paid annually. When each coupon (interest payment) is calculated, the precise period that elapsed between the date when the issue of the series started and the date of the coupon is taken into account. The principal is paid on the day when the last coupon is due.
Galil bonds have been issued by auction since 1985, for terms to maturity up to 20 years.
2.1.2.3 Variable-rate notes
New Gilon: A non indexed floating-rate bond issued to a term of 1-25 years.
Interest is paid once every three months on the last business day of the month. Interest accrues from the first of the month in which the first subseries was issued. The annual interest rate is the weighted average yields of Treasury bills series to a 3-12 month term to maturity, in the ten-day period precedent the interest period.
The New Gilon bond has been issued since April 1999 and is currently issued for a ten-year term.
2.1.2.4 Other
These bonds are indexed to the official exchange rate of the US dollar, from the rate known at the date of issue of the first subseries until two days before payment (of principal and/or interest).
Gilboa: A dollar-indexed bond issued in terms to maturity of 3-20 years (usually issued for 8 years maturity), with floating interest paid at six-month intervals.
The rate of interest for the subsequent half-year is based on the LIBOR six-month dollar interest rate as advertised two business days before the period on which interest is paid, with a possibility of setting a pre-announced differential from LIBOR for each series. The date of the coupon (plus exchange-rate differentials) is set at six months after the issue of the first series.
The Gilboa bond was first issued in 1981. The method of calculating the interest was changed a number of times. Since 1999, the interest rates on the series issued are equal to the LIBOR rate.
This bond has not been issued since January 2000.
2.2 Non-marketable debt
2.2.1 Savings bonds
The State of Israel's debt in foreign currency is made up of Bonds issued by the Israel Bonds Organization.
Fixed-rate Bonds - These Bonds were the first that Israel Bonds marketed and were sold in relatively small amounts relative to other Bonds, at fixed-rate interest and for periods of between 10 and 20 years, although most were sold for periods of between 10 and 15 years.
These Bonds can be redeemed early for the purpose of investment in Israel, donation to a non-profit organization or NIS expenditure in Israel. The data show that early redemptions were minimal.
Until the end of the 1980s interest of approximately 4 percent was paid, without reference to changes in the USD interest rate. From 1990, a fixed rate of interest was set in accordance with market interest rates (see analysis of debt cost below).
Two types of Bonds were offered:
- Bonds on which interest was paid periodically and,
- Bonds on which interest was paid only at the Bond's redemption date (savings).
In 1993, 10-year Bonds at the market interest rate were sold, in two tranches:
- EDI (Economic Development Issue), which paid interest once every six months and in which the minimum amount sold was $25,000;
- zero coupon Bonds, on which interest was paid together with the principal at maturity and that were sold for a minimum amount of $6,000.
In 1998, the fiftieth anniversary of the establishment of the State of Israel, Israel Bonds began to issue two tranches of Bonds called Jubilee, issued for 5 years and 10 years. The minimum amount sold is $25,000 and fixed-rate interest is paid on the Bonds once every six months.
In addition to these Bonds, Bonds are issued in Canada in Canadian dollars, although the total amount issued is relatively small at 2.5 percent of the balance of Israel Bonds (as of end-2003).
Notes - In the mid-1970s, Israel Bonds decided to target an additional population: small banks and financial companies in the USA.
Notes at amounts of $150,000, $250,000 and $1,000,000 were offered to these entities for periods of 10, 7 and 5 years respectively. A Prime-based commercial rate of interest was set for these Bonds in order to encourage their purchase.
Apart from these Bonds, Notes were also issued in the UK (in Sterling) and in Germany (in DM) but the amount issued was small. Over the years Israel Bonds changed its policy and began to re-target Jewish communities rather than banks and financial entities.
At the same time, the minimum amount of the Notes was reduced to $100,000 and $150,000 and the term to maturity was set at 5 and 7 years.
2.2.2 Other
Non marketable instruments.
Domestic
This funding includes the following instruments:
- Bonds designated for pension funds ("Arad" & "Meron");
- Non tradable bonds for insurance companies ("Chetz");
- Emissions managed by the Ministry of Finance;
- Compulsory loans managed by the Bank of Israel.
External
The State of Israel's debt in foreign currency is made up of loans from foreign governments and miscellaneous loans.
3. Selling techniques
Israel government securities are sold at discriminatory price auctions, i.e. each bidder pays the price of its bid at the auctions.
Israel Government Bond and Discount Treasury Bill auctions are announced by the MOF each month. Most of the auctions are for only primary dealers (PD) to submit bids at the auctions of government securities. Investors need to give orders to primary dealers to purchase government securities at the auctions on their behalf.
Each bid may be submitted for government securities of a minimum nominal value of ISS 10 million. If the total amount of bids reaches or exceeds the offering amount at the auction, each bidder's bids at the closing price are affected a proportional amount.
Each PD may also submit non-competitive bids 24 hours after the auction, at the previous day average price. Auction bids must be delivered via the auction function on Bloomberg Platform.
4. Other information
4.1 Valuation of debt instruments
Debt instruments are valued at nominal value, with the exception of Discount Treasury Bills that are valued at average issue price and index linked bonds that are valued with capital uplift.
The net issuance figures given are net changes in the stock of the given debt elements from previous year to the current year. This also includes the change in value resulting from the movement of the exchange rates in the case of foreign currency debt elements and other changes such as debt assumptions.
Lending Facility - The Ministry of Finance operates a lending facility that enables Israel PD's to lend any government bond they wish.
4.2 Fiscal year
Data correspond to calendar year.
4.3 Estimates
None.
4.4 Maturity structure
Residual maturity.
4.5 Duration
The calculation of duration follows the modified duration method. The yield curve used is based on calculations from the daily prices of the government bonds. Average maturity is the weighted average of the term-to-maturity of the separate debt instruments.
The duration and the average maturity of the portfolios are calculated separately; total debt duration and average maturity are the weighted average of the duration and average maturity of the two portfolios, using the volume of the portfolios as weights.The debt management transactions in Italy are within a competence of the Ministry of Economy and Finance. They are run by the Public Debt Management Directorate (PDMD), whose head (the Director General of Public Debt) reports to the Director General of the Treasury. The Treasury is one of the four Departments that form the Ministry of the Economy and Finance.
The PDMD is composed of a number of units, along the following broad categories: domestic funding (front and back office), foreign funding and liability management (front and back office), risk management, information and statistics on the public debt, monitoring of local authority's debt, human resource offices, besides the unit in charge of the Network for the dissemination of public debt management techniques. The PDMD maintains a constant dialogue with Bank of Italy on issues related to debt management and its influence on monetary policy. The PDMD is composed of officials with various professional backgrounds in economics and finance. Day-to-day transactions are carried out with a significant degree of autonomy by the PDMD, while for the strategic issues both the Director General of the Treasury and the Minister are informed and, according to the law, requested to provide an authorization or feedback.
The Treasury bills (BOTs) are short-term bonds, with maturities up to one year, which were introduced to compensate temporary Treasury imbalances. Since the end of the 1970s, they represent one of the most popular ways of household savings due to certain features that make them attractive to retail investors. Their most important feature is short-term maturity, which attracts investors who shy away from medium- and long-term securities because they do not follow the market day by day and hence are not in the position to rearrange their portfolios frequently to ensure adequate liquidity. In Italy, BOTs have been an important part of household's assets and, more generally, their original treasury function has been intensified since the end of the 2010s, especially with respect to the 3 months BOT.
BOTs have maturities of 3, 6 and 12 months. In addition, the Treasury issues bills with broken maturities other than the ones above. These flexible BOTs are primarily used as liquidity management tools and, as such, they are aimed at smoothing out temporal mismatches that may arise between cash inflows and outflows. Flexible BOTs can be issued either by reopening any old BOTs or by auctioning a new bill.
The yield for the investors is entirely represented by the discount at issue, which is the difference between the nominal value and the price paid; redemption at maturity is at par, by single payment.
The CPs are zero coupons, short-term debt securities issued by the Treasury in the international capital markets. They are direct and unconditional obligations of the Republic of Italy, and thus a part of the Italian public debt. Unlike the domestic Treasury Bills (the BOTs), which are auctioned securities, the CPs are placed through non-syndicated private placements operated by major banks with institutional investors. Those major banks constitute the dealers group for the commercial Papers program. The CPs are also registered under the US Securities Act and may be offered within the United States. They are designed to be particularly flexible, as they may be offered in all the major currencies and in any maturity up to one year. The CPs are routinely hedged upon transformation into euro through foreign exchange swaps and are paid free of withholding tax.
The main characteristics of CPs are: maturity of 1 year or less; yield for the investors entirely represented by the discount at issue and no interest paid before maturity (bills may be issued in all the major currencies: EUR, USD, YEN, GBP and CHF); redemption at maturity at par, by single payment.
On 18 April 2007, the Treasury started transacting money market operations (transaction on behalf of the Treasury - OPTES) related to the Availability Account for treasury purposes. The new operations, in line with what has been done by the main Treasuries of the Euro area, is an addition to traditional short-term financing instruments above detailed. These transactions are mainly the collection of non-collateralised money market deposits usually with overnight duration (which means being settled during the working day following the one in which the transaction is performed). They give greater flexibility to the Treasury's liquidity management, which is geared towards the daily satisfaction of short- and very short-term financing, avoiding the recourse to longer term coverage instruments that are more costly. A premise to undertake OPTES transactions has been the effort aimed at improving the forecast for the Availability Account's balance, with the consequential intensification of information exchange among the Ministry of Economy and Finance, Bank of Italy and the relevant administrations. The exchange of information, directed to enhancing the control of the Ministry's available cash, will permit the improvement of the predictability of this balance.
2.1.2.1.1 Short-term bonds
Treasury bonds in Ecu (BTEs) were bonds introduced in October 1987 to diversify the instruments at the disposal of the Treasury at a time when the market was suffering the competition of other securities. In the 1994 issuance programme, it was announced that this type of bond would have not been offered any longer.
The main characteristics of BTEs were: maturity of 1 year; interest paid in arrears with an annual coupon at redemption; redemption at par, by single payment.
2.1.2.1.2 Medium-term bonds
BTPs are government bonds that bear a stated fixed interest, paid semi-annually. Medium-term includes maturities of 3 and 5 years. They played a small role in financing state deficits during the 1970s and early 1980s, due in part to the high levels of inflation in that period. The trend began to reverse itself in 1985. BTPs enjoyed varying success for a while, but they began to play a significant role in Treasury issuing policy only after the establishment of the screen based wholesale market for government bonds (MTS), which provided them with the necessary liquidity. MTS was set up in 1988. This process was also facilitated by the entry into the Italian MTS market of several foreign banks after the markets had been opened to international dealing. The issue policy provides re-opening of each bond by auctioning further tranches monthly with the aim to increase their size and to improve the secondary market liquidity.
The main characteristics of medium-term BTPs are: maturities of 3 and 5 years; interest paid through semi-annual coupons, which are half the annual nominal rate; redemption at par, by single payment.
2.1.2.1.3 Long-term bonds
Long-term treasury bonds (BTPs) are government bonds, that bear a stated fixed interest paid semi- annually. Long-term bonds include maturities of 10, 15 and 30 years; the 30-year BTP was introduced in November 1993 and the 15-year BTP in February 2002.
The issuance activity on the long end of the curve is aimed at supporting the primary and secondary market efficiency, widening the BTP investor base and granting liquidity to all segments of the yield curve.
Syndication continues to be one of the options to give immediate liquidity and improve the distribution of the bonds for maturities longer than 10 years, mainly for the first tranches.
The main characteristics of long-term BTPs are: maturities of 10, 15 and 30 years; interest paid through semi-annual coupons, with rate which are half the annual nominal rate; redemption at par, by single payment.
In the past, there were other instruments, named CTOs, introduced in December 1988 to encourage investors to extend their investment horizons. The possibility of redeeming the bond half way through its maturity has probably contributed towards the shift over to longer-term investments. Apart from the option of advanced refunding, this bond had an issue range analogous to the BTPs.
CTOs were offered with maturities of 8 and 6 years, redeemable on request after 4 and 3 years respectively.
On September 2003, the Treasury launched the program of BTPs indexed to inflation (BTP€i). Both the principal of BTP€i and their stated real semi-annual coupons are indexed to the euro zone Harmonized Index of Consumer Prices (HICP), excluding tobacco. At the maturity of the notes, their holders are recompensed for any loss in purchasing power occurred over the term of the securities. The recovery of the subscribed nominal amount invested in BTP€i is ensured, since the redemption value at maturity is anyway no less than the nominal value.
In September 2004, the Treasury has adopted the auction system as a placement mechanism also for linkers, since then the regular issuance of BTP€i has taken place on a monthly basis, offering, quite always, at least one of the 5, 10, 15 and 30 year tenor available instruments, according to demand and market conditions. Nevertheless, the launch of a new bond is in general done by syndication.
One of the main benefits derived from the implementation of the indexed program was the enlargement of the investor base, both in terms of new accounts not covered before and in terms of geographic distribution. Cost evaluations have been also important to determine the BTP€i issuance program. In fact, real bonds, thanks to their protection against unexpected increases in the price level, allow the debt manager to save on the inflation risk premium, embedded in nominal bond's yields. The premium, growing more than proportionally with respect to duration, determines a lesser slope of the real curve with respect to the nominal curve. This profile allows prolonging the average life of the debt at lower cost in respect to the one that would otherwise be born with the issuance of nominal bonds. In addition, the BTP€i program represents an effective asset liabilities management tool, given that the majority of the revenues are received on a real basis. Taking into account the correlation of growth and inflation cycles it acts as fiscal smoother for government cash flows.
The main characteristics of BTP€is are: maturity of 5, 10, 15 and 30 years; interest paid through real semi- annual coupons, indexed to the euro zone HICP; redemption value indexed in turn to the euro zone inflation, at least at par, by single payment.
In the past, there was only one 10-year indexed bond, issued in 1983 in a small amount.
Since January 1995, CCTs are floating-interest-rate instruments indexed to the 6-month BOTs yields and with a 7 years term. The issue policy provides re-opening of each bond by auctioning further tranches monthly. In the past, these bonds were related to 12-month BOTs yields with a different mechanism and they have been playing a major role in Treasury issuance policy. They enabled debt maturity to be extended after the critical period culminated in the early 1980s, when public debt maturity dropped to little more than one year.
Since 2010, the Treasury has analyzed the possibility of launching a new CCTeu mainly because, during the summer of 2007, current CCTs, with coupons indexed to 6 month BOT auction yields, occasionally started to show a suboptimal performance on the secondary market. In particular, the observed levels of price volatility seemed to be somehow inconsistent with the nature of such instruments, considering also the profile (mainly domestic) of participants in CCTs market, which are different from the other Italian government securities. Hence, the new indexation mechanism has been introduced in order to address the need to enlarge the investor base in floater instruments issued by the Treasury and to improve the efficiency and liquidity of the secondary market of such instruments.
The new class of nominal floating rate bonds is indexed to 6 month Euribor (so called CCT-eu) and has been introduced on June 24th 2010 by syndication. The new instrument is gradually replacing current Treasury Certificates (CCTs) indexed to 6 month BOT auction yields, through several exchange transactions. The first CCT-eu has been marketed by a 5.5 year maturity. Therefore, CCTs-eu have been issued with a 7 year maturity. At the first stage, the new bonds are launched by syndication, but reopenings are regularly offered by auctions at the end of the month.
The main characteristics of CCTs are maturity of 7 years; interest paid through semi-annual coupons, linked to the yield of the 6-month Euribor; redemption at par, by single payment.
Introduced in February 1995, Zero Coupon Treasury Certificates (CTZs) are a different choice for households and fund managers who want to invest in zero coupon bonds with longer maturities than BOTs. In addition, issuances are broken down into successive tranches, which ensure their fungibility and improve their negotiability on the secondary market.
The main characteristics of CTZs are: maturity of 2 years (up to December 2000 they were issued according to a 18-month maturity, which was then abolished); yield for the investors entirely represented by the discount at issue and no interest paid before maturity; redemption at par, by single payment.
The Euro Medium-Term Notes (EMTNs) and Global Bonds are debt securities issued on the international capital markets. The Euro Medium-Term Notes address investors mostly located in Europe and Asia. This program is designed to enhance the Republic's ability to respond to funding opportunities in a very flexible and diversified fashion. Therefore, the Notes may take the form of public syndicated issues, public non- syndicated issues, or private placements, depending on how financial intermediaries participate in the underwriting process and on investors' listing preferences. In any case, it is a reverse inquiry process with respect to other sources of funding, which usually implies a saving in terms of funding costs.
Notes under the program can be issued in euro as well as in most other currencies. Their maturity and structure can be tailored to fully reflect investors' preferences, if deemed appropriate by the Republic: they can span in a range from standard "plain vanilla" terms (fixed and floating rate bonds) to entirely custom-made cash flows.
The Global Program is the most important source for international funding of the Republic of Italy. Securities issued in this format address investors located anywhere in the world, as the word "Global" suggests. The focus of the Global Bond shelf is the USD market, particularly important, in terms of visibility, to enlarge the international base of investors. The major leading international investment banks form a group of dealers whose focus would be to sustain the Republic's USD benchmark Global bonds. Thanks to a much-focused approach, the Republic has been able to improve its penetration in international markets. The main pillars for this approach have been a clear commitment to the USD market through ensuring a regular presence in the market, providing continuous liquidity for each transaction, and being transparent and open to investors. As a result, the Republic of Italy has built a liquid yield curve in US dollars, up to the 30-year maturity and is one of the leading non-US borrowers in the USD market.
No restrictions are applied for currencies, listing and maturities. The Treasury may hedge all or part of the currency and interest rate exposure arising from any individual Notes or Bonds.
Another type of debt instruments, particularly aimed at retail investors, was issued by Cassa Depositi e Prestiti - which until December 2003 was included in the Central Government Sector - and distributed throughout Post offices. On that date Cassa Depositi e Prestiti (CDP) has been transformed in a stock company and moved outside the accounting perimeter of the general government. As a result of the assets and liabilities reshuffling between the Central Government and the CDP which aimed at determine a fair balance sheet value of the latter part of this non-marketable outstanding debt has rested to the new CDP and part has been attributed to the ministry of Economy and Finance.
The interests of Postal Notes belonging to Government debt are compounded and paid at requested redemption. If the redemption is requested by the investors within the first year after the issuance date, the Notes do not yield any interest. There are two different kinds of Postal Office Notes: Ordinary Postal Notes (Buoni postali ordinari) and Term Postal Notes (Buoni postali a termine).
The Ordinary Postal Notes do not bear any coupon during their life, except for a single final coupon, which accrues at intervals of two months and annual capitalisation until the twentieth year. Then, they bear a lower interest rate on linear basis and, after the thirtieth year, do not yield any interest until redemption.
On the other hand, the Term Postal Notes return a stated percentage of the capital invested which increases according to given specified maturities (i.e. 40 per cent for 7-year term or more and 65 per cent for 10-year term or more). Should an early redemption be needed, investors are subject to fixed penalty in terms of interest yielded.
The Notes obey to the general tax system provided for the other government bonds.
Up to 11 December 2003, demand deposits (Libretti postali) and current accounts held at Post offices by the private sector were considered as a Central government debt. Since then, demand deposits are no longer part of the central government debt, as they are a liability of the Cassa Depositi e Prestiti.
Funds borrowed by the Central Government outside the debt capital market, mostly through loans, represent another non marketable source of debt financing. Cassa Depositi e Prestiti S.p.A. is the principal financial institution funding the Central Government.
Until 1993, the current account overdraft facility is held by the Treasury at the Bank of Italy. This facility was abolished in 1993 to comply with the Maastricht Treaty, which prohibits the monetary financing of the deficit by the Central bank, and the existing balance (39.4 billion euros) was transformed into BTPs. Finally, these BTPs held at Bank of Italy were exchanged with current interest rate BTPs, to enhance the overall debt liquidity on secondary market (see par. 4.1).
Finally, the Central Government holds liquid accounts deposited in the Central Treasury of the state, whose creditors are subjects external to Central Government sector.
Selling techniques vary from public auctions for most of internal debt instruments to private placements, especially for external debt. In detail, the syndication procedure is used for the placement of Global bonds but also for the first tranche of long term bonds (BTP with maturities longer than 10 years and, in general, also BTP€i) to enhance their distribution. Regarding the non-marketable debt, up to 11 December 2003 the issuance of Postal Notes was made by tap issues and distributed from all the Italian Post offices.
Starting from October 2008 the Treasury has been using three kinds of auction:
In October 2008, indeed, the Ministry of Economy and Finance (MEF) announced that due to the high volatility which was affecting financial markets and thanks to the enhanced auction facility implemented by the Bank of Italy as requested by the Ministry, the medium and long-term nominal fixed (BTP) and floater rate (CCT) on-the run bonds would have been placed through the uniform-price auction mechanism. In this type of auction already adopted for the BTP€is the price and issuance amount are discretionally set by the Treasury within the issuance range previously announced. Through the same announcement, along with the usual medium and long-term on-the run bonds auctions, the Treasury reserved the right to issue off-the-run bonds through the uniform-price auction mechanism above described. In that case the amounts are discretionally set by the Treasury within an issuance range globally referred to all the off-the-run auctioned bonds. This measure also aims at enhancing flexibility in the debt management strategy during the current financial market crisis.
As usual, the auctions are competitive for BOTs and uniform marginal price for CTZs. It has been used a uniform marginal price for medium-long-term instruments auctions until the third quarter of 2008.
As regards CTZ, BTP, CCT e BTP€i, each operator participating to a government bond auction is allowed to submit up to 3 bids. As regards BOT auctions, otherwise, following the auction of May the 6th, each operator will be allowed to submit up to 5 bids.
The auction procedure was introduced for the BTP€i in September 2004. As said before, it is a marginal auction where the allotment price and the assigned quantity are decided at the discretion of the Public debt Director.
As the foreign debt is regarded, unlike domestic debt securities, these bonds are underwritten by leading financial intermediaries and subsequently placed with final investors.
On February 2002, the Ministry has held the first exchange auction, in which a new bond is offered and one or more old bonds are bought back by the Treasury. The Treasury uses this kind of transactions to manage the refinancing risk by smoothing out the redemption profile and enhancing the efficiency of trading conditions of the various instruments in the secondary market. The government bond issued is assigned by means of marginal auctions; the bonds' allotment price and assigned quantity are determined at the discretion of the Public Debt Director. The evaluation is referred to the opportunity cost of funding, expressed in terms of Euribor equivalent. Taking into consideration their contribution to the efficiency of the government bonds market, only the Specialists in government bonds have been allowed to participate in exchange auction operations.
In the course of 2004, it was also inaugurated a screen based auction system. This system, which is in addition to (and not in substitution of) the auction procedure, allows the direct intervention in the secondary market of government bonds. Many goals have been thus achieved: flexibility both regarding the choice of bonds to be repurchased and the length of time needed to carry out the transaction; enhanced efficiency of the government bond secondary market; improved control of front running and squeeze events which lead to cost reduction.
In 2010, 5 exchange transactions of a total amount of 6.4 billion of euro were carried out.
As mentioned in the previous paragraph 2.1.1.3, in the course of 2007 the Treasury began OPTEStransactions (usually with overnight duration) using its Availability Account for treasury purposes. Liquidity management transactions can be carried out by auction or bilateral negotiation: auctions make for more transparent and regular operations especially in the case of large amounts of money; the use of bilateral operations may instead be suited when the auctions possibly transacted in the same day were not adequate to cover the liquidity needs, when market conditions appear particularly uncertain not to permit a reasonable prediction of the outcome of the operation or, finally, when the maturity of the deposit requested doesn't seem sufficiently liquid on the market or suitable for the period intended to be covered.
The transaction takes place when the difference between the initial forecast of the Availability Account and its potential balance exceeds the threshold of 500 millions: it performs an operation of collection if the difference is negative or an operation of investment if the difference is positive.
The valuation of debt instruments is based on nominal value. According to the EU rules, for inflation linked bonds the nominal value includes the revaluation of the index.
The fiscal year is based on the calendar year.
Tax treatment: Withholding tax on income accrued from the Government bonds is equal to 12.5%
There are no estimated data in the attached tables.
The maturity structure is based on the initial maturity.
The average term to maturity of our debt is the residual average life of each bond weighted by its nominal amount.
In the calculation of Macaulay duration, no specific issue arises from zero-coupon bonds (BOTs, CTZs) and fixed rate notes (BTPs). For CCTs, the floating rate notes indexed to the most recent 6-month BOT auction, the "average refixing period" methodology is applied which means that the duration is considered equal to the frequency of the coupon's resetting. The inflation linked bonds (BTP€i), which bear a real fixed coupon, are treated as fixed rate notes. The Treasury keeps abreast of new possible methodologies which could be applied to this category.
Since 1999, both average term to maturity and Macaulay duration of foreign debt are provided after swap.
"Kokusai Tokei Nempo" ("Annual Japanese Government Bonds Statistics", in Japanese only).
The Ministry of Finance establishes JGB issuance plan for each fiscal year in line with the fundamental goals of the debt management policy, namely:
1) to achieve stable and smooth financing and
2) to minimize medium to long term financing costs.
Also, given the large issuance amount, our guiding principles in terms of the debt management policy is to give ample predictability and transparency to the market, but at the same time, ensure flexibility when there is a need to respond to changes in the circumstances. Articles 85 of the Constitutional Law, Fiscal Act, Act on Special Account as well as Act on National Government Bonds define the basic rules and governance of our debt management.
The Fiscal Investment and Loan Program (FILP) is an investment and loan activity which provides essential long-term and low-interest funds for policy, which are difficult to be provided through private funding. FILP enables the execution of large-scale and very long-term public projects with the capital mainly procured by issuing FILP bonds. Specifically, it provides long-term, fixed and low interest capital in the areas pertaining to small and medium-sized enterprises, and also invests in the fields related to exploration or research and development, of natural resources. FILP bonds are a type of bonds issued to secure financial sources for such operation. From the market perspective, however, FILP bonds have no differences in terms of the product characteristics etc. The figures in the tables therefore include those pertaining to FILP bonds.
*Note 1: Mentioned below is in principle the debts under ongoing issuance. Aside from these debts of current forms, the Ministry has been previously engaged in issuing debts with different terms, ad-hoc fiscal operation purposes, private placement etc. , the figures of which are included in the tables, although limited in volume.
*Note 2: There is a slight inconsistency between the figures for "Central Government Debt" in the tables and the figures computed on SNA basis, mainly due the inclusion of the above mentioned FILP bonds in the former figures.
Treasury Bills are considered to be one type of JGBs, consisting of 6-month discount bonds and 1-year discount bonds. TBs form a part of annual issuance plan together with mid and long term products. Financing Bills (FBs), on the other hand, are the short-term bills issued on ad-hoc basis under a limited discretion authorized by annual congressional approval to cover temporary shortage of the General Account and some of the Special Accounts during the middle of a fiscal year, and therefore, do not appear in the annual issuance plans which are announced at the outset of the year.
Despite the above classification, from the market perspective, TBs and FBs have been issued under a unified issuance named "Treasury Discount bills (T- Bills)" since February 2009. T-Bills are characterized as discount rate products, and are included in "Treasury Bills" under "Money Market Instruments" in the tables.
None
None
2.1.2.1.1 Short-term bonds
None
2.1.2.1.2 Medium-term bonds
2 and 5-year bonds.
2.1.2.1.3 Long-term bonds
10, 20, 30, 40-year (20, 30, 40-year are collectively referred to as "Super Long-Term Bonds".)
10-year inflation-indexed bonds; the value of the principal varies as it is linked to CPI (excluding fresh food), and the figures for the outstanding of this product are also computed accordingly. (The issuance of this product is currently suspended.)
2. 1.2.3 Variable-rate notes
15-year Floating-rate bonds. (The issuance of this product has been suspended since 2008.)
None
2. 2.1 Savings bonds
While not directly addressing at encouraging savings of the households, the Ministry offers a series of products called "JGBs for Retail Investors". The primary purpose of these products is to diversify the investor base of JGBs. JGBs for Retail Investors consist of 10-year floating-rate, 5-year fixed-rate, and 3-year fixed-rate which was recently introduced (in July 2010).
* Note: Non-residents are not hampered from holding JGBs for Retail Investors, but due to the data availability, such particular volume of foreign holding is not included under the memo item 4.3 "Non-marketable debt held by non-residents" in the table 1 and 2.
2 . 2.2 Other
The items which fall under this category are the following;
- Cash borrowings
- Subsidy Bonds, and Subscription / Contribution Bonds: A specific category of bonds which substitutes for cash payments from the Ministry to individuals, international organizations.
Ministry of Finance introduced "JGB Market Special Participants" scheme, or what is often called "primary dealer" system outside of Japan, in October 2004. Under this scheme, the Ministry grants special entitlements to a certain group of auction participants in return for several obligations. Auction is carried out in conventional method in principle - for the limited number of products (40-year and 10-year inflation indexed bonds), however, Dutch auction method is applied.
In order to guarantee transparency in issuance, the Ministry deems it important to make announcements on essential information related to auctions in a timely fashion. The announcements are made in the following timeline;
Note: Treasury Discount Bills
Nominal value
April to end-March (e.g. Fiscal Year 2009: April 2009 to end-March 2010).
None
Table 1 and 3: Residual maturity
Table 2: Initial maturity
To calculate the average term to maturity, we use weighted average of term to maturity of each issue number.
None
The Ministry of Finance and Economy (MOFE) issues government bonds and most of the procedures related to the issuance are delegated to the Bank of Korea (BOK).
Ministry of Finance and Economy: The Government Bond Act authorizes the MOFE to issue government bonds with the consent of the National Assembly and in accordance with the relevant laws and decrees regulating the general account, special accounts, and/ or extra budgetary funds. The MOFE also carries out all the basic policies governing the financial sector, including the securities market.
Financial Supervisory Commission: The Financial Supervisory Commission (FSC) supervises and monitors the securities and futures market. It grants license to financial institutions to perform their business activities. It also inspects financial institutions and imposes sanctions when necessary.
Korea Exchange and Korea Securities Dealers Association: The Korea Exchange (KRX) and the Korea Securities Dealers Association (KSDA) regulate the securities market as self-regulatory bodies. The KRX supervises its 89 member firms and takes necessary actions to ensure smooth trading. It sets up listing requirements, discloses material information about listed companies, and investigates alleged irregularities. The KSDA mediates conflicts between its members and investors through the Securities Investors Protection Centre.
Bank of Korea : The Bank of Korea (BOK) has no regulatory power over the bond market, although it determines the timing and the volume of monetary control bonds, such as Monetary Stabilization Bonds (MSBs).
Not applicable.
There are four types of government bonds, including Treasury Bonds, Foreign Exchange Stabilization Fund Bonds, National Housing Bonds and Reimbursement Bonds for Expropriated Lands, can be issued.
During the past years, many other types of government bonds have been merged into Treasury Bonds to make government bonds market thicker and liquid. For instance, Rural and Fishing District Development Bond, Farmland Securities, National Housing Fund Bonds and Grain Securities have been completely absorbed (converted) into Treasury Bonds. Currently, Treasury Bonds are simplified to four types with 3-year, 5-year, 10-year, 20-year maturities and 10 years inflation linked bonds. Interests accrued by Treasury Bonds are paid biannually since March 2003 (formerly paid quarterly). The Public Money Management Fund Account is in charge of the issuance and repayment of Treasury Bonds with the banking service provided by the Bank of Korea.
The Foreign Exchange Stabilization Fund Bonds in local currency are issued by MOFE to finance the Fund to stabilize the foreign currency market. The FESFBs are issued with less than 20-year maturity. However, MOFE has been transferring these into Treasury Bonds since November 2003 to increase the liquidity of Treasury Bonds market.
The MOFE also issues the FESFBs in foreign currency in global markets to do investor relations for the Korean economy and to enhance the national credit.
The National Housing Bonds are issued at the request of the Ministry of Construction and Transportation to finance housing constructions. The Housing Act requires individuals and firms that are engaged in construction industry to purchase the National Housing bonds at the acquisition of business licenses and real estate agencies at the registration of properties. The National Housing Bonds have maturity of five years, ten years and twenty year.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
2.1.2.1.3 Long-term bonds
Not applicable.
Subscription to international financial agencies; such as the International Monetary Fund (IMF) and the Asian Development Bank (ADB).
Domestic borrowings from BOK and extra-budgetary funds.
External borrowings from international financial organizations; such as IBRD, ADB, and foreign financial institutions.
Contract Authorization.
All the government bonds except National Housing Bonds and Reimbursement Bonds for Expropriated Lands are issued by auction and underwriting methods at market-determined prices. Korea established the electronic tendering, Korea Trading System (KTS) and designated 20 Primary Dealers to use KTS to trade benchmark bonds since January 2002. The National Housing Bonds are sold through a compulsory selling mechanism whereby concerned individuals and firms are obliged to buy assigned quantity of the National Housing Bonds when they seek to obtain licenses from a municipal government or when they apply to register their real estates to registry office.
Face value.
Is calendar year.
Not applicable.
Initial maturity.
In Luxembourg, government debt management (issuance, redemption, interest payments, etc.) is handled by the State Treasury, which is placed under the responsibility of the Minister of the Treasury.
A debt issue must be authorised by a special Act. Conditions and terms of issue are set forth in a Ministerial regulation.
At present, the government of Luxembourg does not use money market instruments to raise cash. No change in this policy is expected in the short or medium-term.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
Any medium term bond has been issued in 2010.
2.1.2.1.3 Long-term bonds
In May 2010, the Luxembourg government launched fixed-rate bonds for 2 billion EUR for institutional investors. The nominal interest rate is 3.375% and the final maturity is set at May 18th 2020, interests are paid annually.
2.1.2.2 Index-linked bonds
None.
None.
None
None.
On 31 December 2010, the outstanding amount of bank loans is 1.232 millions EUR. These have all been contracted in the years 2006 to 2008 with the Bank and the "Caisse d'Epargne de l'Etat".
All bonds are issued by bank syndicate.
All published official statistics on government debt reflect the nominal value of each issue.
Is calendar year.
All published official statistics on government debt refer to calendar years.
Given the low volume of Luxembourg central government debt, all statistics relating thereto are actual, rather than estimated, figures, with the obvious exception of future projections.
Residual maturity.
According to the legal framework, the Ministry of Finance and Public Credit is vested to issue securities for funding the federal government-borrowing requirements in capital markets.
The main objectives to observe when issuing debt in capital markets are:
i) To reduce the vulnerability of the federal government related to adverse movements in financial markets, by issuing long-term fixed rate bonds.
ii) To reduce the financial cost of the public debt, subject to a level of risk compatible with a healthy evolution of public finance and the development of local financial markets.
iii) To give more certainty to domestic debt market participants, by announcing the auction calendar on a quarterly basis.
iv) To promote liquidity along the domestic yield curve and to increase market depth, by reopening outstanding bond issues.
v) To broaden the investor base.
The Central bank, acting as a financial agent of the federal government, is in charge of the issuing process for domestic debt securities.
Article 73 Section VIII of the Political Constitution of the United Mexican States (UMS) empowers the Congress to:
i) Establish the basis upon which the Executive may borrow upon the credit of the Nation.
ii) Approve such borrowings.
iii) Order the repayment of the National Debt.
Article 89 Section I of the Political Constitution of the UMS empowers and establishes the duty of the President to promulgate and execute the laws enacted by the Congress in order to provide for such laws exact observance by the government.
Article 31 Sections V and VI of the Organic Law of the Federal Public Administration provide that the Ministry of Finance and Public Credit shall:
i) Manage the public debt of the Federation.
ii) Perform and authorise all transactions involving the public credit.
Article 4 Section V of the General Law of Public Debt establishes that the Federal Executive, acting through the Ministry of Finance and Public Credit, shall be vested with the power to contract for, and manage, the federal government public debt and to provide the guarantee of the federal government in credit transactions.
Short-term zero-coupon bonds denominated in pesos issued at a discount in maturities of 28, 91, 182 and 364 days. These instruments are auctioned and traded based on its yield to maturity.
None.
None.
2.1.2.1.1 Short-term bonds:
None.
2.1.2.1.2 Medium-term bonds
Bonos de Desarrollo del Gobierno Federal (BONOS):Fixed rate semi-annual coupon bonds denominated in pesos, issued in maturities of 3 and 5 years. Bonds are auctioned each month and traded based on its yield to maturity.Issuance began in 2000.
This category includes bonds of the federal government and has 2 fixed-rate notes that was issued under the MTN program. These securities are denominated in US dollars.
2.1.2.1.3 Long-term bonds
Bonos de Desarrollo del Gobierno Federal (BONOS):Fixed rate semi-annual coupon bonds denominated in pesos, issued in maturities of 10, 20 and 30 years. Bonds are auctioned each six weeks and traded based on its yield to maturity.Issuance began in 2001, 2003 and 2006 respectively.
The federal government external debt portfolio includes 27 fixed-rate bonds. These securities were issued with initial maturities ranging from 5 to 100 years. These securities are denominated basically in US dollars, but also in euros, Swiss francs, Japanese Yens and pounds sterling.
Bonos de Desarrollo del Gobierno Federal denominated in UDIS (UDIBONOS): Fixed-rate securities denominated in UDIS[1] from 3-, 10- and 30-year maturity. UDIBONOS are auctioned each month and were designed to be effectively a "real rate of return" security.
This category doesn´t include any floating-rate bond denominated in foreign currency
Bonos de Desarrollo del Gobierno Federal (BONDES D):Floating rate monthly coupon bonds denominated in pesos, issued with a maturity of 5 years. Bonds are auctioned each 2 weeks and traded based on its yield to maturity.Issuance began in 2006.
None.
This category includes loans with the Mexican banking sector and other debt.
This category includes loans with the International Financial Organisms, the banking sector, and Bilateral Organisms.
The Central bank, acting as exclusive financial agent of the federal government, is in charge of the issuing process for domestic debt securities. On the last business day of each week, the Central bank announces the amount of the securities to be auctioned the following week, as well as the auction type, which can be at a single price or at multiple prices, depending on the security. Auctions usually take place on Tuesdays every week, receiving bids until 11:00 am. The general results are announced at 11:30 am. Transactions are settled 2 business days after the auction date.
Recently, the Federal Government began using the syndication method to place long term fixed and indexed rate bonds (Bonos y Udibonos). The placement date of domestic securities using the syndication method is announced in the quarterly calendars.
When issuing external debt securities, the federal government mandates one or more investment banks as selling agents. The timing of the issuance depends on market conditions. Usually transactions are launched and priced on the same day and settled 3 to 5 days later. Results are announced through a press release on the day of the pricing.
Valuation criteria depend on the type of institution that holds the instruments. Most buyers must value their instruments at market prices.
Banxico provides market prices for the on-the-run domestic issues, on its web site, following the link:
www.banxico.org.mx/eInfoFinanciera/InfOportunaMercadosFin/MercadoValores/ VectorPreciosCetes/portada_valuacion.html.
Authorised Price Vendors provide these market prices.
Is calendar year.
None.
Initial maturity.
Modified duration.
[1] UDI stands for Unidad de Inversión that is a unit of account indexed to daily inflation. The value of the UDIs is derived from the rate of inflation and rises as the Consumer Price Index (CPI) rises. It was introduced with 1 UDI = 1 peso on 4 April 1995. The UDIs are non-traded monetary units used to translate the price, interest payment and principal of UDI-denominated securities into pesos.
Additional information (including issuance data) on the Dutch State Treasury Agency may be found on the website: www.DSTA.nl.
The Dutch State Treasury Agency[1] (DSTA) is a division of the Ministry of Finance. The aim of the DSTA is to fund the central government borrowing requirement using both the capital and the money market. The central government funding requirement is the sum of the money market portfolio at the end of the previous year, redemption payments on existing long-term debt in the budgetary year plus the forecasted budget balance. An official estimate of the budget balance is presented to parliament in the state budget each September prior to the start of the budgetary year. The budget balance, of course, can change during the course of the budgetary year. The borrowing requirement and accompanying funding plan are published in December prior to the year concerned. The funding plan is updated regularly.
Managing the risks associated with the national debt lies at the heart of the state's funding policy. The risk management strategy is aimed at controlling the amount exposed to interest rate risk each year to contain the risk to the interest burden in the budget associated with servicing the national debt. In line with both international guidelines and international standards, the funding policy of the Dutch government is to finance the national debt at the lowest possible cost at an acceptable risk for the budget. Starting in 2008, a new risk framework was put in place. The framework for the period 2008-2011 introduced a benchmark for the national debt. A 7-year benchmark with a steady redemption profile is replicated. In principle, the issuance policy remains unchanged. Interest rate swaps are used to convert the issuance to the benchmark.
Fluctuations in the funding need that occur during the year and unexpected changes in the budget balance are financed through money market operations. The money market portfolio thus acts as a buffer[2]. The remainder of the funding need is financed in the capital market through the issuance of Dutch State Loans (DSL's) spread throughout the year.
During the period 1980-1993, the Dutch state issued Treasury Bills ("schatkistpapier"). When - with phase two of the European Monetary Union (EMU) - Central banks were no longer allowed to provide credit facilities to the government, the state started issuing Dutch Treasury Certificates (DTC's). In addition to this, and in order to maintain the treasury-balance within the required margins, the DSTA became active in the money market also as a lender. This occurs when the cash balance with the Central bank exceeds the amount allowed (of 50 million euros).
Initially, the issuance of DTC's was restricted to a limited amount designed to meet temporary fluctuations only. The reassessment of the risk management framework in 2002 revealed that it was advisable to cover a larger portion of the funding need through treasury paper. Consequently, it was decided to raise the target amount for outstanding DTC's at year-end, to serve as a base stock and to cover unexpected fluctuations in the funding requirement. The increased funding need from 2008 onwards has increased the outstanding amount of DTC's to higher levels[3].
In July 2007, the DSTA started with the issuance of commercial paper, first for maturities up to 3 months, later also for maturities up to 1 year. Commercial papers can be issued in Euros, US dollars, British pounds and Swiss francs. In essence, commercial papers fit the aim to improve the regulation of the daily cash balance and to mitigate credit risk and can also contribute to lower funding costs[4]. Commercial Papers in foreign currencies are fully hedged against exchange rate risk by concluding FX swaps.
Short-term deposits and call money.
Sell-Buy-Backs and Buy-Sell-Backs
In the period 1980-1998, the Dutch state was the largest issuer in the guilder bond markets and in that period the Dutch state issued plain sinking funds, extendable sinking funds, callable sinking funds and bullets. As of March 1988, only non-callable bullets are issued and since 1 January 1999, only DSLs denominated in euros are issued. The DSTA announced in its Outlook 2011 that it stands ready to issue a US dollar Dutch State bond, provided that such an issuance would result in lower funding costs vis-à-vis a comparable issuance in euros.
2.1.2.1.1 Short-term bonds
Instruments with a maturity up to 1 year.
2.1.2.1.2 Medium-term bonds
Instruments with a maturity of 1 to 5 years.
2.1.2.1.3 Long-term bonds
Instruments with a maturity of more than 5 years.
None.
None.
In 2006, the DSTA issued Principal Strips (comparable to zero-coupon bonds), following the newly issued bond maturing in 2023. The new 2023-bond was created with the same characteristics as the existing 2023-bond issued in 1993, except for the coupon rate (which is exactly half the 7.5% of the old 2023-bond)[5].
None.
Until 1994, besides the bond issues, private placements were also used to fund the yearly central government borrowing requirement. Thereafter, only bonds (Dutch State Loans, DSLs) have been issued. An exception is the 10 billion euro placed privately to Fortis Bank NV/SA in 2008. This private placement took place in the context of the take-over of long-term debts owed by Fortis Bank Netherlands to Fortis Bank NV/SA. In 2010, the outstanding debt of the Netherlands Antilles and Curacao were taken over by the State of the Netherlands, for a total amount of 1.3 billion euro.
Until February 1990, the only selling technique for DSLs was a Dutch auction. In February 1990, a Tap issue was used for the first time. In principle, DSL's are now auctioned through a Tap every second Tuesday of the month, with the exception of August (no auction) and December (reserve date). In the light of the increased funding need from 2008 onwards, the DSTA started an off-the-run facility which was initially employed every 4th Tuesday of the month. This facility for reopening off-the-run bonds will be continued into 2011, albeit with a different frequency. The number of auctions has been scaled back to once every quarter, always on the fourth Tuesday of the first month. The selection of a number of bonds to be tapped is done on a case-by-case basis and will be published in the quarterly issuance calendars.
The Agency began using a Primary Dealer system in 1999. This system was introduced to ensure an efficient distribution channel for DSLs in rapidly changing and increasingly internationally oriented capital markets. The DSTA conducts its auctions electronically through MTS Netherlands. In 2003, a new selling technique called the Dutch Direct Auction was introduced for the initial issues of to longer-dated DSL's. The technique was designed in order to engage end investors directly in the primary issuance. The end-investor can invest in Dutch Bonds, through the Primary Dealer of his choice. The DSTA is the sole book runner. Contrary to the Tap auction, the DDA is a uniform price auction. In line with the goal of this auction, preference is given to real money accounts over trading accounts. Bids are allocated starting with the best bidder. Should trading be crowded out by real money accounts, the DSTA has the right to allocate up to 35% of the amount to be allotted to trading accounts. This rule was put in place to help guarantee liquidity of the bond.
In principle, DTC's are auctioned twice a month, on the first and third Monday of the month through a uniform price auction (in yield). The DSTA retains the right to add action dates if the funding need necessitates doing so. Starting 5 March 2000, DTCs have been issued electronically via BAS (Bloomberg Auction System). Admitted parties (Primary Dealers for DSLs and Single Market specialists) may place their bids in Bloomberg (BAS) from 11:00 a.m. until 11:30 a.m. (CET). The uniform allotment interest rate is announced after the close of the auction. The bids are sorted in ascending order of yield. Starting with the lowest yield, bids are accepted by the government until the desired volume is reached. Rationing is applied in accepting bids at the cut-off yield in order not to exceed the target volume for the auction. To enhance the properly functioning of the market, the Agency has the right to limit the amount allotted to each participant to 40 per cent of the total. All bidders, whose bids have been accepted, receive the cut-off yield determined by the market.
Nominal value.
Is calendar year.
None, except for debt held by non-residents (data available up to 2001 only).
Residual maturity. The average term to maturity in the table is the average maturity of DSLs.
[1]. Since 1 January 1999, Primary Dealers assist the Dutch State Treasury Agency in the primary and secondary market.
[2]. Apart from the issuance of Dutch State Treasury Certificates (DTC's) and Commercial Papers, money market operations also include the day-to-day fine-tuning to keep the treasury balance with the central bank between 0 and 50 million euros at the end of each day.
[3]. For a current estimate of the outstanding amount of DTC's, see the issues of the Quarterly Outlook, available at www.dsta.nl.
[4]. For more detailed information on the issuance of Commercial papers see "Outlook 2008" (December 2008) and "Quarterly Outlook 2" (April 2007), both available through http://www.dsta.nl/.
[5]. For a more detailed description on the launch of the new 2023-bond, see "Outlook 2006" (December 2005) and "Quarterly Outlook 1" (January 2006), both available through www.dsta.nl.
Debt management is undertaken pursuant to statutory powers provided by the Public Finance Act 1989. These powers are vested in the Minister of Finance, but most powers have been delegated to the Treasurer of the New Zealand Debt Management Office (NZDMO), an operating unit within the New Zealand Treasury.
New Zealand government treasury bills are denominated in New Zealand dollars, are sold at discount to par, and carry no coupon. The bills are redeemable at par on maturity.
Euro commercial papers.
Reserve Bank bills (issuance was discontinued in February 1999 but resumed on 12 November 2008).
There are New Zealand government bonds, a small number of Yankee bonds (US dollar), a small Bulldog bond, with less than GBP 5 million outstanding, and Euro Medium-Term Notes currently on issue. New Zealand government bonds are denominated in New Zealand dollars with a fixed coupon paid semi-annually in arrears. The bonds are redeemable at par on maturity.
2.1.2.1.1 Short-term bonds
Fixed rate instruments maturing in less than one year.
2.1.2.1.2 Medium-term bonds
Fixed rate instruments maturing between 1 year and 5 years.
2.1.2.1.3 Long-term bonds
Fixed rate instruments maturing after 5 years.
New Zealand government inflation-indexed bonds are denominated in New Zealand dollars with a fixed coupon paid quarterly in arrears. On maturity, the principal, adjusted for movements in inflation, is repaid. Issuance of the February 2016 bond was discontinued in May 1999; however, plans are underway to resume issuance by way of a September 2025 inflation-indexed bond. In September 2010, a syndicate of banks was appointed to assist with issuance of the new bond which is hoped will be completed in 2011.
Floating-rate notes.
From 2005, it includes derivative instruments.
Kiwi bonds provide a low-risk fixed-income instrument for small, mainly retail, investors. Kiwi bonds are issued on a tap basis, with maturities of six months and one and two years. (A four-year maturity was discontinued in early 2006). Interest may be paid quarterly or compounded quarterly and paid on maturity. Interest rates are set at a margin below that of government bonds of similar maturity.
Settlement cash deposits with the Reserve Bank of New Zealand (RBNZ) as part of the RBNZ Liquidity Management regime are included. Since early 2006, Settlement cash has increased from 20m NZD to around 7b NZD.
Treasury bill tenders are held on a weekly basis. Treasury bills available at tender are currently offered for three month and six month and 1 year periods. The six month maturity was reintroduced on 3 March 2009 and the 1 year bill on 13 April 2010.
Government bonds are issued mainly by way of regular weekly tenders although tap tenders can be held. Scheduled tenders are held on dates announced in the month prior to each quarter. The maturities of government bonds offered for tender typically extend out to 10 years although in May 2009, the May 2021 bond was introduced. Tap tenders are held at short notice with tenders being announced at 11.30 am on the day of the tender. Tap tenders occur infrequently, generally when there is wide-spread demand between weekly tenders. Nine tap tenders have been held since their inception in July 2008.
Bond repurchases, using the mechanism of reverse tap tenders, were introduced on 8 April 2009 with one such tender to date. Bond repurchases would be expected to be used to assist the management of bond maturities.
In tenders for treasury bills and government bonds, successful bidders are allocated securities at the yield each bidder has bid. At the highest yield accepted, securities are allocated, if necessary, as far as practicable on a prorata basis in relation to the amount available at that yield.
For both Treasury bill and government bond tenders, the Crown reserves the right to accept oversubscription of up to 50 per cent of the amount offered for tender in any maturity. This is subject to the provision that the total amount of bids accepted in all maturities does not exceed the total amount offered for the tender.
Participation in the primary market is restricted to counterparties that meet certain credit criteria set by NZDMO. However, neither the primary nor the secondary domestic debt markets are constrained by category of institution or by the domicile of the institution. Primary markets mainly include banks however money market and secondary bond market participants include banks, financial institutions, corporations, brokers, and the central bank. Both resident and non-resident investors are participants in the New Zealand financial markets. Non-resident investors can hold bonds directly in their own names or through local or global custodians. Securities are settled electronically on a delivery versus payment (DVP) basis through the NZ Clear system. The system is open to direct participation by foreign participants on a membership basis. There is no restriction on short selling in the New Zealand money market and bond market although repo is generally short in nature being available on an overnight to one month basis.
The financial statements of the New Zealand government are prepared in accordance with the Public Finance Act 1989 and for the first time, at June 2008, were prepared under New Zealand International Financial Reporting Standards (NZ IFRS). The statements include full line-by-line consolidation of the core Crown, state-owned enterprises, and Crown entities. Borrowings are accounted for either at nominal value, adjusted for unamortized premiums or discounts (amortized cost), or at fair value. Fair values are disclosed for borrowings carried at amortized cost.
Total Crown gross debt is the total borrowings of the total Crown, after eliminations of internal cross-holdings. This equates to the amount in the total Crown balance sheet and represents the whole-of-government obligation to external parties. The debt of state-owned enterprises and Crown entities is not explicitly guaranteed by the core Crown.
The disclosed gross sovereign-issued debt (GSID) is debt issued by the core Crown including RB Bills issued by the Reserve bank of New Zealand, excluding the debt of state-owned enterprises and Crown entities, but does not eliminate internal cross-holdings. The government uses GSID as a key fiscal indicator.
The figures reported here for central government debt are based on the book values of components of gross sovereign-issued debt. Prior to 1992, the figures are not compatible with the OECD format.
1 July to 30 June.
Total marketable debt held by non-residents includes domestic debt held by non-residents as per survey and some foreign currency debt.
Residual maturity.
Central government is in a net asset position. The financial assets consist mainly of deposits with the Central bank (Norges Bank), financial investments through the Government Pension Fund and equities in domestic enterprises, lending to, and direct investments in state banks and state enterprises. The central government debt consists of government bonds, Treasury bills and deposits with the Treasury by other state institutions.
The Ministry of Finance is responsible for management of central government debt. The Ministry has delegated the operational responsibility for auctions and operations in the domestic bond market to Norges Bank. The Bank also provides fiscal agency functions and advises on debt management policy. Central government cash reserves are placed with Norges Bank.
New 12-month T-bills are issued 4 times a year with settlement on IMM-dates. Since November 2008, T-bills have also been used in the government securities swap facility where T-bills are swapped for covered bonds with rollover every 6-month. This measure has led to a substantial increase in the outstanding volume of T-bills. The last swap agreements mature in 2014.
None.
None
There are normally five benchmark loans quoted in the market, with remaining maturity of one to eleven years. When remaining maturity is less than one year, the bond is no longer regarded as a benchmark.
2.1.2.1.1 Short-term bonds
None with originally short-term maturity, but existing bonds within this maturity segment are occasionally reopened. These bonds were originally opened as a long-term bond.
2.1.2.1.2 Medium-term bonds
None with originally medium-term maturity but existing bonds within this maturity segment are occasionally reopened. These bonds were originally opened as a long-term bond.
2.1.2.1.3 Long-term bonds
New 11-year domestic bonds are usually opened every 2 years.
None.
None.
None.
Savings bonds are no longer issued.
Mainly deposits with the Treasury by government institutions.
Auctions of both benchmark bonds and T-bills are executed through an electronic platform on Oslo Stock Exchange.
Data are based on nominal/face value. Swaps are not included.
Equals calendar year.
None.
Life to maturity.
The underlying piece of legislation governing the rules of Treasury securities issuance is the Public Finance Act of 27 August 2009 (Journal of Laws No. 157, item 1240, as amended). Under this Act, only the Minister of Finance is authorised to issue Treasury securities providing monetary benefit (i.e. Treasury debt securities).
The Treasury securities are classified in terms of maturity as follows:
The general issue conditions are laid down in applicable ordinances, while detailed conditions are stated in letters of issue made available to the public by the Minister of Finance. Making the letter of issue available to the public is a prerequisite for the issue to become effective. An issuance letter is deemed to be made available to the public if published on the Ministry of Finance Web Site (www.mf.gov.pl).
The Act also regulates the category of instruments known as savings Treasury securities, i.e. securities that are offered for sale solely to individual investors, associations, foundations and other social organizations. These instruments can also be excluded from trading on the secondary market or they can be traded only between buyers admitted to purchase. This facilitated the segmentation of the market between wholesale investors and retail investors (individuals).
The Treasury securities market in Poland is also regulated by the Financial Instruments Trading Act of 29 July 2005 (Journal of Laws No. 183, item 1538, as amended), Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading and Public Companies Act of 29 July 2005 (Journal of Laws 2009 No. 185, item 1439, as amended), and the Capital Market Supervision Act of 29 July 2005 (Journal of Laws No. 183, item 1537 as amended).
The following entities are the main participants of the Polish securities market:
The data covers only State Treasury Debt, which comprises more than 99.8% of the total debt of the central government. The rest comes from liabilities (mainly loans, matured payables) of other central government entities such as agencies, hospitals etc.
As all data is presented in national currency, the table 2 Net Issues of this publication includes also the FX changes of the level of foreign currency debt during the reporting period.
Polish Treasury securities are issued on the domestic market - denominated in Polish Zloty (PLN) and on the international financial markets. Further information on instrument characteristics, selling techniques and annual reports are available on the Ministry Finance Web Site (www.mf.gov.pl).
Treasury bills are dematerialised instruments with a face value of PLN 10 000. Since July 2006, bills have had maturity ranging from 1 to 90 days or from 1 to 52 weeks and have been registered by National Bank of Poland in the Securities Register. In addition, bills with the same redemption date are assimilated automatically, making them homogeneous instruments. They are redeemed at par at maturity or at a buy-back auction at auction price.
None.
None.
All T-bonds issued by the State Treasury are of dematerialised form. Instruments offered at auctions and designated for institutional investors have face value of 1 000 PLN. Auctioned T-bonds are redeemed at par at maturity (excluding CPI-linkers that are redeemed at value resulting from a product of initial face value - 1000 PLN and value of indexation coefficient calculated for maturity date) or may be the subject for an early redemption at auction price using switching or buy-back tenders.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
2-year zero-coupon bonds designated for institutional investors, offered since October 1999.
5-year fixed rate bonds designated for institutional investors, offered since February 1994. Outstanding series pay an annual coupon ranging from 5.75% to 4.25% p.a.
3-year fixed rate bonds denominated in JPY: In November 2009, Poland launched a 3-year fixed rate samurai bond issue denominated in Japanese yen. The coupon of 1.92% p.a. is paid semi-annually and the nominal amount is JPY 23.3 billion.
4-year fixed rate bonds denominated in CHF: In March 2010, Poland issued a 4-year fixed rate bond denominated in Swiss francs. The coupon of 2.125% p.a. is paid annually and the nominal amount is CHF 475 million. The issue was re-opened in August 2010 and the aggregate outstanding amount is CHF 625 million.
5-year fixed rate bonds denominated in JPY: In June 2004, Poland launched a 5-year fixed rate samuraï bond issue denominated in Japanese yen. The coupon of 1.02% p.a. is paid semi-annually and the nominal amount is JPY 50 billion.
In November 2009, Poland launched a 5-year fixed rate samuraï bond issue denominated in Japanese yen. The coupon of 2.34% p.a. is paid semi-annually and the nominal amount is JPY 21.5 billion.
5-year fixed rate bonds denominated in EUR: In January 2004, Poland issued a 5-year Eurobond denominated in euro. The issue was launched off an EMTN Program. The coupon of 3.875% p.a. is paid annually and the nominal amount is EUR 1.5 billion.
In February 2009, Poland issued a 5-year Eurobond denominated in euro. The bond is listed on the Luxembourg Stock Exchange and was issued under the EMTN Program. The coupon of 5.875% p.a. is paid annually and the nominal amount is EUR 1 billion. The issue was re-opened in May 2009 and the aggregate outstanding amount is EUR 1.75 billion.
5-year fixed rate bonds denominated in CHF: In March 2004, Poland issued a 5-year fixed rate bond denominated in Swiss francs. The coupon of 2.125% p.a. is paid annually and the nominal amount is CHF 400 million.
In May 2005, Poland issued a 5-year fixed rate bond denominated in Swiss francs. The coupon of 1.875% p.a. is paid annually and the nominal amount is CHF 400 million.
In May 2007, Poland issued another 5-year fixed rate bond denominated in Swiss francs. The coupon of 2.875% p.a. is paid annually and the nominal amount is CHF 500 million. The issue was re-opened in April 2008 and the aggregate outstanding amount is CHF 725 million.
In September 2009, Poland issued a 5-year fixed rate bond denominated in Swiss francs. The coupon of 3.0% p.a. is paid annually and the nominal amount is CHF 750 million.
In February 2011, Poland issued another 5-year fixed rate bond denominated in Swiss francs. The coupon of 2.75% p.a. is paid annually and the nominal amount is CHF 350 million.
All the issues in Swiss francs were launched off the EMTN Program and are registered on the Swiss Stock Exchange.
5-year fixed rate bonds denominated in USD: In July 2010, Poland issued a 5-year fixed rate USD denominated bond off SEC registered shelf and also on the Luxembourg Stock Exchange. The nominal amount is USD 1.5 billion and the coupon is 3.875% p.a., paid semi-annually.
2.1.2.1.3 Long-term bonds
10-year fixed rate bonds designated for institutional investors, offered since May 1999. Outstanding issues pay an annual coupon ranging from 6.25% to 5.00% p.a.
20-year fixed rate bonds designated for institutional investors, offered since April 2002. Outstanding issues pay an annual coupon of 5.75% p.a.
30-year fixed rate bonds designated for institutional investors, offered since June 2007. The only series issued so far pays an annual coupon of 5.00% p.a.
7-year fixed rate bonds denominated in JPY: In July 2003, Poland launched a 7-year fixed rate debut samuraï bond issue denominated in Japanese yen. The coupon of 0.84% p.a. is paid semi-annually and the nominal amount is JPY 25 billion. Another series of 7-year samuraï bonds was launched in June 2005. The nominal amount is JPY 75 billion and the coupon is 1% p.a. paid semi-annually.
7-year fixed rate bonds denominated in EUR: In March 2010, Poland launched the 7-year Eurobond issue denominated in euro. The bonds are listed on the Luxemburg Stock Exchange. Coupon: 3.75% p.a. paid annually; nominal amount: EUR 1.25 billion.
8-year fixed rate bonds denominated in GBP: In November 2002, Poland issued an inaugural Eurobond denominated in pound sterling. The bond with the maturity of 8 years has the coupon of 5.625% p.a., paid annually and the nominal amount of GBP 400 millions. The issue is registered on the Luxembourg Stock Exchange.
9-year fixed rate bonds denominated in CHF: In April 2008, Poland issued a 9-year fixed rate CHF denominated bond. The bond was launched off the EMTN Program and has been registered on the Swiss Stock Exchange. The coupon of 3.625% p.a. is paid annually and the nominal amount is CHF 250 million.
10-year fixed rate bonds denominated in EUR: In March 2000, Poland launched the 10-year Eurobond issue denominated in euro. The bonds are listed on the Luxemburg Stock Exchange. Coupon: 6% p.a. paid annually; nominal amount: EUR 1 billion.
In February 2001, Poland launched the next 10-year fixed rate Eurobond issue denominated in euro. The bonds are listed on the Luxembourg and Frankfurt Stock Exchanges. Coupon: 5.5% p.a. paid annually. The issue was re- opened in December 2001. The aggregate nominal amount is EUR 1 billion.
The next 10-year fixed rate euro denominated Eurobond was issued in March 2002. The bond is registered on the Luxembourg Stock Exchange. The coupon of 5.5% p.a. is paid annually and the nominal amount is EUR 750 million.
In February 2003, Poland issued another 10-year fixed rate euro denominated bond. The bond is the first issue launched off the EMTN Program. The bonds are listed on the Luxembourg Stock Exchange. The coupon of 4.5% p.a. is paid annually. The issue was re-opened in May 2003 and in March 2004. The aggregate principal amount is EUR 3 billion.
In February 2006, Poland issued another 10-year fixed rate euro denominated bond, listed on the Luxembourg Stock Exchange with the annual coupon of 3.625% and nominal amount of EUR 3 billion.
The next 10-year fixed rate euro denominated Eurobond was issued in June 2008. The bond is listed on the Luxembourg Stock Exchange and was issued under the EMTN Program. The coupon of 5.625% p.a. is paid annually and the nominal amount is EUR 2 billion.
In October 2009, Poland launched the private placement 10-year fixed rate euro denominated bond. The coupon of 4.675% p.a. is paid annually and the nominal amount is EUR 500 million.
The next 10-year fixed rate euro denominated Eurobond was issued in September 2010. The bond is listed on the Luxembourg Stock Exchange and was issued under the EMTN Program. The coupon of 4% p.a. is paid annually and the nominal amount is EUR 2 billion. The issue was re-opened in January 2011 and the aggregate outstanding amount is EUR 2 billion.
10-year fixed rate bonds denominated in USD: In July 2002, Poland issued a 10-year fixed rate USD denominated bond. The bond is a first issue off SEC registered shelf and is also registered on the Luxembourg Stock Exchange. The coupon of 6.25% p.a. is paid semi-annually. The issue was re-opened in September 2002 and the aggregate outstanding amount is USD 1.4 billion.
In October 2003, Poland issued another 10-year fixed rate bond denominated in USD off SEC registered shelf. The bond is also registered on the Luxembourg Stock Exchange. Coupon: 5.25% p.a. paid semi-annually. The nominal amount is USD 1 billion.
The next 10-year fixed rate USD denominated bond was issued in October 2005. The nominal amount is USD 1 billion and the coupon is 5% p.a., paid semi-annually.
In July 2009, Poland issued a 10-year fixed rate USD denominated bond off SEC registered shelf and also on the Luxembourg Stock Exchange. The nominal amount is USD 3.5 billion and the coupon is 6.375% p.a., paid semi-annually.
10-year fixed rate bonds denominated in CHF: In May 2005, Poland issued a 10-year fixed rate CHF denominated bond. The bond was launched off the EMTN Program and has been registered on the Swiss Stock Exchange. The coupon of 2.625% p.a. is paid annually. The issue was increased in July 2005 and the aggregate outstanding amount is CHF 1.5 billion.
10-year fixed rate bonds denominated in JPY: In November 2006, Poland issued a 10-year fixed rate samuraï bond. The coupon of 2.06% p.a. is paid semi-annually and the nominal amount is JPY 25 billion.
12-year fixed rate bonds denominated in CHF: In May 2007, Poland issued a 12-year fixed rate CHF denominated bond. The bond was launched off the EMTN Program and has been registered on the Swiss Stock Exchange. The coupon of 3.25% p.a. is paid annually and the nominal amount is CHF 1 billion.
15-year fixed rate bonds denominated in EUR: In January 2005, Poland issued a 15-year fixed rate euro denominated bond. The bond was launched off the EMTN Program. The coupon of 4.2% p.a. is paid annually. The issue was increased in March and in May 2005 and the aggregate outstanding amount is EUR 5.25 billion.
In January 2007, Poland issued another 15-year fixed rate euro denominated bond, listed on the Luxembourg Stock Exchange with the annual coupon of 4.5% and nominal amount of EUR 1.5 billion.
In October 2009 Poland issued 15-year fixed rate registered bond, which is denominated in euro. The coupon of 5.125% p.a. is paid annually and the nominal amount is EUR 410 million.
In January 2010, Poland issued another 15-year fixed rate euro denominated bond, listed on the Luxembourg Stock Exchange with the annual coupon of 5.25% and nominal amount of EUR 3 billion.
15-year fixed rate bonds denominated in JPY: In November 2005, Poland launched a 15-year fixed rate samuraï bond issue. The coupon of 2.24% p.a. is paid semi-annually and the nominal amount is JPY 50 billion.
In January 2011, Poland launched off the EMTN Program a JPY-denominated 15-year fixed rate bond issue. The semi-annual paid coupon is 3% p.a. and the nominal amount is JPY 18 billion.
20-year fixed rate bonds denominated in USD: The bonds were issued in July 1997 in the "Yankee" bond market, denominated in USD with semi-annual coupon of 7.75% p.a. and the nominal amount of USD 100 million, registered by US Securities and Exchange Commission.
20-year fixed rate bonds denominated in JPY: In November 2006, Poland launched a 20-year fixed rate samuraï bond issue. The coupon of 2.62% p.a. is paid semi-annually and the nominal amount is JPY 60 billion.
30-year fixed rate bonds denominated in JPY: In March and August 2004, Poland launched off the EMTN Program two JPY-denominated 30-year fixed rate bond issues. The semi-annual paid coupons are 2.6475% p.a. and 3.220% p.a. respectively and the nominal amounts are JPY 6.8 billion and JPY 16.8 billion respectively.
In November 2007, Poland launched a 30-year fixed rate samurai bond. The coupon of 2.81% p.a. is paid semi-annually and the nominal amount is JPY 50 billion.
In June 2008, Poland launched off the EMTN Program a JPY-denominated 30-year fixed rate bond issue. The semi-annual paid coupon is 3.3% p.a. and the nominal amount is JPY 25 billion.
30-year fixed rate bonds denominated in EUR: In February 2005, Poland issued a 30-year bond denominated in euro. The coupon is 4.45% p.a. paid annually and the nominal amount is EUR 500 million. The issue was launched off the EMTN Program.
30-year fixed rate bonds denominated in USD: In October 2005, Poland issued a 30-year fixed rate USD denominated bond. The bond was issued off SEC registered shelf and registered on the Luxembourg Stock Exchange. The coupon of 5.408% p.a. is paid semi-annually and the nominal amount is USD 100 million.
50-year fixed rate bonds denominated in EUR: In July 2005, Poland issued a 50-year bond denominated in euro. The fixed coupon is 4.25% p.a. paid annually and the nominal amount is EUR 500 million. The issue was launched off the EMTN Program.
"Brady Bonds" were issued under the agreement with commercial banks represented by the so-called London Club. The agreement provided for the reduction and the restructuring of the Polish debt to commercial banks. Bonds were issued in October 1994. They are fixed rate bonds denominated in US dollars. As a result of several buy-back transactions, the notional amount of the remaining Brady bonds declined from some USD 8 billion at the and of 1994 to around USD 0.3 billion currently. The remaining Brady Bonds mature in October 2024. They have step-up coupon rates starting from 4% to 4.75% p.a. at one end, and 5% p.a. on the other (rates depend on bond type). The bonds are collateralized and have embedded call option.
12-year inflation linked bond designated for institutional investors, offered since August 2004. The annual coupon of 3.00% p.a. is paid on inflation adjusted T-bonds' face value.
15-year inflation linked bond designated for institutional investors, offered since August 2008. The annual coupon of 2.75% p.a. is paid on inflation adjusted T-bonds' face value.
3-year floating rate bonds are instruments with a face value of PLN 100. They are designated for retail investors and legal entities, excluding: banks, insurance companies, investment trusts, pension funds, brokerage houses, limited liability companies and joint-stock companies. Sale to retail investors is conducted through the national network of customer service outlets. 3-year bonds give their holder a yield in a form of a coupon paid every 6 months, interest rate for particular coupon period changes and depends 6M WIBOR(Warsaw Interbank Offered Rate).
4-, 7- and 10-year floating rate bonds designated for institutional investors, offered since January 2004. The bonds pay semi-annual coupon. They are redeemed at par at maturity or at a buy-back auction at auction price. Coupon formula: interest rate is based on 6M WIBOR.
10-year floating rate bonds designated for institutional investors, offered since 1995. Outstanding issues pay an annual coupon based on 52 weeks average yield. The issuance of these bonds was suspended in April 2002.
7-year floating rate bonds: In December 2003, Poland launched a 7-year floating rate bond denominated in USD. The bond was issued off EMTN Program as a private placement. The coupon of 6-month Libor +0.325% is paid semi-annually and the nominal amount is USD 400 million.
10-year floating rate bonds: In September 2005, Poland launched a 10-year floating rate bond denominated in USD. The bond was issued off EMTN Program as a private placement with a nominal amount of USD 81.81 million. The coupon of 3-month Libor +0.115% is paid semi-annually.
None.
Non-marketable instruments with possibility of premature redemption carried out on request of the bond holder. These bonds have been issued since the second half of 1999. These securities are available mainly to individuals, but also associations, foundations and another social organizations are admitted to purchase. Bonds are sold through the issue agent's network (customer service outlets) at a price which is equal to face value - i.e. PLN 100.
2-year fixed rate bonds: The annual interest is capitalised. Outstanding bonds have coupon rates ranging from 5.75% to 4.00% p.a.
4-year indexed linked bonds: The interest is paid annually. Coupon formula: base interest rate + margin. Base interest rate is calculated as a 12 month Consumer Price Index (CPI) preceding the coupon period.
10-year indexed linked bonds: The annual interest is capitalised. Coupon formula: base interest rate + margin. Base interest rate is calculated as a 12 month Consumer Price Index (CPI) preceding the coupon period.
Special (passive) issues on the domestic market: Special issues or passive Treasury securities refer to those issues that serve specific purposes of the government's economic policy. These include bonds that were issued in order to regulate liabilities of the State budget incurred at an earlier date or that allow the State Treasury to issue new liabilities outside the financial markets without conducting a public offer.
A characteristic feature of these issues is the absence of a primary market, superseded by an initial placement of the bonds. These securities include: bonds issued in order to increase the Bank Gospodarki Zywnosciowej SA's own capital.
Other liabilities: This item includes loans, predominantly towards international financial institutions (World Bank, European Investment Bank, European Bank for Reconstruction and Development and Council of Europe Development Bank), as well as matured payables (i.e. amounts due, that are not paid on time as provided by the law, or in terms of the agreed contracts made), liabilities towards the budgetary sphere for non-indexation of wages in the early 1990s and loans drawn by the Labour Fund.
Currently, Treasury securities are offered on the domestic primary market through auctions and through the retail network of the issue agent. Additionally since November 2001, T-Bond switching auctions have been conducted. On these auctions investors can "switch" T-bonds before their upcoming maturity date into benchmark issues on a non-cash basis. Treasury bonds offered on international financial markets are issued by syndicates of foreign financial institutions (investment banks).
Instruments aimed at the institutional investors: Treasury bills and bonds are placed on the market by competitive auctions, through which each bidder buys bonds/bills according to prices offered in their bids. On January 1st 2011, the new "Ordinance on the conditions of issuing Treasury bonds offered through wholesales" has introduced the option for MoF to organize regular sale auctions using uniform price format - the option has not been used to the date.
They are sold at discount, at par or premium, depending on the auction results. Auctions are organised and conducted by the National Bank of Poland (NBP). Clearing and depository functions fall to NBP (T-bills) and the National Depository for Securities (T-bonds).
Starting from January 2003, primary market participation is limited to banks (Treasury Securities Dealers) which were selected on the basis of uniform qualifying criteria (at the moment 12 banks, including three foreign institutions). Treasury Securities Dealers are granted special rights, namely:
At the same time, the Treasury Securities Dealers are obliged to purchase at least 5% of Treasury securities sold at all auctions in each quarter.
Treasury bills are traded on an OTC non-regulated market and thus the transactions that involve bills are executed by the interested parties without any limitations and without the necessity of having to obtain any permit whatsoever.
Treasury bonds denominated in the national currency are predominantly traded on non-regulated markets (OTC market). The turnover on regulated market - Warsaw Stock Exchange - was marginal; it constituted less than 0.1% of the total turnover in 2010.
For purposes of improving the transparency, liquidity and efficiency of the over-the-counter (OTC) market for government securities, the Electronic Treasury Securities Market (ETSM) was introduced in April 2002. In 2004, after strategic alliance between CeTO S.A., a company authorized by the Minister of Finance to act as administrator of the electronic trading platform, and MTS SpA, ETSM transformed into MTS Poland. In 2009 Warsaw Stock Exchange acquired a majority share in the company, which was re-branded to BondSpot S.A. The market changed its name into Treasury BondSpot Poland. In 2010, it concentrated 3.8% of the total turnover in 2010.
Instruments aimed at the retail sector: The marketable and savings bonds earmarked for retail investors are sold, according to prices fixed by the issuer, through the national network of customer service outlets (CSO) organised by the issue agent.
The holders of all types of bonds could extent their investment through conversion into a new series of a particular bond type. For this purpose, a new bond purchase declaration should be submitted through the CSO network.
Treasury bonds issued on the international markets are sold by syndicates of financial institutions. Some of the bonds are listed on stock exchanges (Luxembourg Stock Exchange, Frankfurt Stock Exchange, and Swiss Stock Exchange). However, they are traded mainly on the OTC market. Poland's international bonds together with issues from other new EU member states are also traded on electronic platform provided by EMTS Ltd. - the market is called New Euro MTS. In general, bond transactions are cleared in two systems: Depository Trust Company (DTC) (for US investors) and Euroclear/Clearstream.
Nominal value.
Is calendar year.
None.
Initial maturity.
Cash flows used to calculate Macaulay duration are discounted with zero coupon rates (duration of floating rate notes is equal to time to the nearest coupon payment day). Present value is used for weighting in case of different currencies.
The Portuguese Debt Management Office (IGCP), established in December 1996, is responsible for managing the treasury, the direct debt and the financing of the central government, in compliance with the Debt Framework Law, the State Budget Laws and the guidelines defined by the Government.
IGCP took over these roles from the former Directorate-General of the Public Credit Board and from the part of the Directorate-General of the Treasury previously responsible for the Government funding policy and Treasury management.
The creation of IGCP was an important step in establishing the necessary conditions for the smooth adaptation of the country to the introduction of the Euro (1 January 1999), considering the high degree of financial skills required for an efficient and accurate functioning of the activities of issuing and managing the public debt.
The statutory bodies of the IGCP are the Chairman of the Board of Directors, the Board of Directors, the Advisory Board and the Audit Committee. The Board of Directors comprises the chairman and two executive directors, all of them appointed by the Council of Ministers for three year mandates. The Board is empowered to conduct all duties and to take all actions committed to the IGCP under the terms of the Law. The Audit Committee is responsible for following up and controlling the financial management of IGCP and the Stabilisation Fund of Public Debt, as well as supervising the respective accounting procedures and activities. The activity of IGCP is also subject to supervision by the Audit Court.
The IGCP publishes monthly and annual reports, which are available on demand and on its Web Site (www.igcp.pt).
BTs are short-term securities with a face value of one euro, which can be issued with maturities of up to one year. They are issued at discount and placed via auction or limited subscription offer and redeemable on maturity at nominal value.
ECP consists in the issuance of tradable instruments on non-regulated markets, issued at discount and with maturities between one week and one year. The maximum outstanding of this instrument is limited to EUR 4 billion or equivalent and the programme allows the issuance of securities in EUR and other currencies.
None.
Treasury Bonds
Standard medium- and long-term book-entry securities issued by syndication, auction or by tap with:
The Programme allows for Notes to be admitted to listing on the official list and to trading on the regulated market of the Luxembourg Stock Exchange. The Programme also permits Notes to be issued on the basis that they will not be admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system or to be admitted to listing, trading and/or quotation by such other or further competent authorities, stock exchanges and/or quotation systems as may be agreed with the Issuer. Notes may be denominated in any currency or currencies, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements. Any maturity is permitted subject, in relation to specific currencies, to compliance with all applicable legal and/or regulatory and/or central bank requirements. Notes may be interest-bearing or non-interest bearing.
Includes other bonds (both in domestic and foreign-currency) issued before 2003. The weight of these bonds in the total marketable debt is now negligible (less than 0.2%).
Includes OT, MTN and Other bonds bearing a fixed interest rate.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
Currently, there are outstanding bonds with initial maturity of 5 years.
2.1.2.1.3 Long-term bonds
Currently, there are outstanding bonds with initial maturity of 10, 15 and 30 years.
None.
Includes MTN and Other bonds bearing a floating interest rate.
Retail bonds - perpetual bonds with a fixed rate issued in the domestic market in the 1940s. The weight of these bonds in the total marketable debt is negligible (less than 0.1%).
The savings instruments are issued with the objective of capturing households' savings. Their main feature is the fact that they are retail distributed, that is, they are issued directly to single investors and they have small minimum subscription amounts. These instruments can only be subscribed by households; they are non-tradable and may only be transferred due to the death of the owner.
It includes two types of instruments: Saving Certificates and Treasury Certificates. The main characteristics are as follows:
Saving Certificates (C series is the current available series for subscription):
Treasury Certificates:
The Republic of Portugal also operates in the repo market, as part of the integrated management of public debt and central treasury. Bonds and T-bills for repo are issued on demand and are canceled at the maturity of the trade.
As an additional instrument of cash management, IGCP has in place several non-committed credit line facilities with Primary Dealers.
Special Saving Certificates that represent internal loans of the Portuguese Republic with maturities up to 18 months. All entities compliant with the principle of centralized cash management, including general government and other government related institutions, can use excessive cash balances to subscribe these instruments.
These instruments are also included in this residual category.
Auctions: issues of the main negotiable domestic market instruments, fixed rate Treasury bonds, and Treasury Bills.
Syndicated issues: this selling technique has consistently been used on the issue of new benchmark Treasury Bonds, subsequently increased through auctions.
Direct negotiation: issues under the Euro Medium-Term Notes Programme, Euro-Commercial Paper Programme, other non-tradable instruments, and also legally possible for the main tradable instruments (BT and OT, even if it has never been used).
Continuous issues (on demand): Savings and Treasury Certificates are issued at the IGCP and Post Office counters.
The central government debt is expressed at nominal value and in millions of euro. The debt denominated in other currencies is converted into euro according to the exchange rate of the last working day of the month to which the data are attributed.
All data are presented on a public accounting basis and are recorded on a cash basis (e.g. each flow is registered in the public accounts when the payment or receiving effectively occurs).
Calendar year.
The information available is based on administrative records, which are, in turn, based on exhaustive record of operations.
Initial maturity.
Duration and average term to maturity are calculated for the total outstanding debt including swaps and other derivatives. It does not include securities issued to FRDP - Public Debt Regularization Fund - in order to conduct operations to promote liquidity in the secondary market, as well as to intervene in financial derivatives operations imposed by an efficient management of public debt.
[1] See Decree-Law No. 280, of 17 September 1998
The Ministry of Finance of the Slovak Republic (MoF) is issuer of the government debt securities. Debt and Liquidity Management Agency (short name ARDAL) is from the beginning of 2004 responsible for debt and cash management. At the same time, the State Treasury is acting as an electronic bank for some public finance institutions and all budgetary institutions including MoF SR. Government securities issuance policy is determined by "The Strategy of Debt Management" approved by government. Main legislation related to government securities is as follows: the Act on Securities, the Bond Act and the Act of the State Debt and State Guarantees.
Treasury bills are issued as discounted securities with the face value EUR 1 (starting January 1st 2009). Treasury bills are registered in the Central Securities Depository (CDCP SR, a. s.) and listed on the Bratislava Stock Exchange (BCPB, a. s.). Both institutions are eligible for ECB transactions. Treasury bills are issued with the maturities up to 364 days. The issue calendar is published on quarterly (or yearly) basis.
None.
None.
Government bonds are issued as interest-bearing securities with fixed interest rate in a book-entry form with a face value EUR 1. The securities are registered in the Central Securities Depository. Government bonds are listed on the Bratislava Stock Exchange. Since 2004, the issuance calendar is published on a yearly basis.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
Government bonds with fixed interest rate coupon and maturity of 1 to 5 years.
2.1.2.1.3 Long-term bonds
Government bonds with fixed interest rate coupon and maturity of more than 5 years.
None.
Medium and long term government bonds are issued as interest-bearing securities with float interest rate in a book-entry form with a face value EUR 1. The securities are registered in the Central Securities Depository and listed on the Bratislava Stock Exchange. Since 2004, the issuance calendar is published on a yearly basis.
Medium and long term government bonds are issued as zero coupon bonds in a book-entry form with a face value EUR 1. The securities are registered in the Central Securities Depository and listed on the Bratislava Stock Exchange. Since 2004, the issuance calendar is published on a yearly basis.
None.
Data in this item represents all loans that are the liabilities of the Slovak Republic.
Despite the possibility of direct sale and underwriting, the mostly used method of issuing state debt securities is tender in form of a competitive auction. ARDAL is the state agent for issuing of all state debt securities. ARDAL is organizing primary market i.e. T-bonds and T-bills auctions. Issue conditions as well as auction conditions are published 1 week before the issue/auction. From year 2010, the first part of the benchmark issues can be opened with syndication and rest is sold mainly by auctions.
Amounts reported are face values.
The ACT/360 convention is used for the calculation in regard of Treasury bills and variable-rate notes.
Until the end of 2004, the convention 30/360 or 30E/360 was generally used. In the effort of harmonizing with the EU market, there is ACT/ACT convention used on fixed and zero coupon state bonds commencing in 2005.
Is calendar year.
None.
Original maturity.
The Central Government Debt of the Republic of Slovenia is managed by the Ministry of Finance. Central Government's borrowings and debt management operations are executed in line with the provisions of the Public Finance Act (hereinafter referred to as PFA), which sets out basis for debt management activities.
According to Article 82 and 84 of the PFA the Annual Financing Program of the central government budget represents the basic operational document for the execution of the central government budget financing and debt management transactions. The annual Financing Program is prepared by the Ministry of Finance and approved by the government following the parliamentary approval of the central government budget for the given year.
Following the Article 81 of the PFA, the government is allowed to borrow, within a given fiscal year, for financing:
- a deficit of central government budget including the Lending and Repayment Account deficit
- debt repayments in the current and the following two fiscal years.
The borrowings in a given fiscal year may thus be increased for pre-financing reasons.
This enables the Republic of Slovenia:
- to better adjust borrowings in the case of a volatility increase of the market conditions;
- to execute more efficiently the borrowings program, especially if the strategic target is to build a benchmark curve in pan European market, including the minimal size of an issue which is 1 billion EUR.
The Financing Program contains basic principles of the central government budget financing:
- targeted annual amount of borrowing with provisional breakdown by instruments;
- method of issuance (syndication/auctions);
- auction calendars;
- buyback and/or exchange schemes;
- estimated size and structure of debt after the execution of the annual Financing Program.
Its strategic objectives assure timely provision of financing resources for smooth budget execution.
The description and the list of Government Securities are publicly available on the Ministry of Finance web page:
http://www.mf.gov.si/en/areas_of_work/government_securities/primary_market
All Slovenian government securities are denominated in Euros. Until 2008, the government securities issued in the local market were in the dematerialized registered form on the holders' accounts with the central securities' registry maintained by the local CSD, the KDD - Central Clearing and Depository Corporation Inc., Ljubljana (KDD), while government bonds placed in the international market were issued in bearer form as Global Notes registered with the international clearing houses Clearstream and Euroclear.
Slovenian government bonds and Treasury Bills are listed on Ljubljana Stock Exchange on the bond market segment. In addition, Slovenian government benchmark bonds are traded on the MTS Slovenia.
Slovenian Treasury Bills are euro denominated discount instruments with maturities of 3, 6 and 12 months; redeemable at par on maturity, and the nominal amount is 1000 EUR. Treasury Bills are issued via auctions according to the auction calendar. Only primary dealers for Slovenian Treasury Bills may directly participate in the auctions. Treasury Bills are issued in a book-entry form.
Treasury Bills were introduced as central government budget financing instruments in May 1998. From 2001 to 2006, the share of short-term financing was approximately 30 % of the total central government budget borrowing. This share was reduced after the adoption of euro in the beginning of 2007 in order to bring the government bond issues to benchmark size. The outstanding amount of Treasury Bills represented 10% of 2007 borrowing quota, 8% of the 2008 borrowing quota, 16% of the borrowing quota in 2009, and 1% only of the borrowing quota in 2010. Due to the limited number of issuances per year, their small size (30 to 50 million EUR per issuance/tranche) and low liquidity, Treasury Bills are held by local investors.
None.
None.
Until 2001, Slovenian government bonds were issued both on the local market and on the international financial market in the form of Eurobonds. Between 2001 and 2006, auctions of bonds denominated in local currency or bonds denominated in foreign currency/payable in local currency were executed in the local market. Since adoption of the euro on 1 January 2007, government bonds are issued in benchmark sizes by way of syndication in the European financial market.
Fixed rate euro denominated benchmark bonds have standard maturities 3, 5, 10 and 15 year. They are redeemable on maturity at nominal value and have the benchmark sizes of 1-1.5 bn euro. Until 2010, 1-3 medium- and long-term benchmark bonds are issued per year.
2.1.2.1.1. Short-term bonds
Medium and long-term bonds with initial maturity of more than 1 year and remaining maturity up to 1 year at the end of each observed fiscal year are included in the tables.
2.1.2.1.2. Medium-term bonds
Medium-term bonds are bullet bonds with maturities from 1 to 5 years with annual coupon payments. Medium and long-term bonds with the remaining maturity from 1 to 5 years at the end of each observed fiscal year are included in the tables. Benchmark bonds issued after the adoption of euro with initial maturity of 3 and 5 years represent the largest portion of the total nominal outstanding amount of the bonds included in the tables for 2007 onwards. The rest are bonds issued in a local currency before the adoption of euro in 2007.
2.1.2.1.3. Long-term bonds
Long-term bonds are bullet bonds with maturities of more than 5 years with annual coupon payments. Benchmark bonds issued after the adoption of euro with initial maturity of more than 5 years represent the largest portion of the total nominal outstanding amount of the long-term bonds included in the tables for 2007 onwards. The rest are bonds issued in the local currency before the adoption of euro in 2007 and Eurobonds.
The Central Government Budget issued Index-linked bonds in local currency on a yearly basis until 2003. The index-linked bonds issued for special purposes in 1990's, had different types of indexation: inflation or foreign exchange. Index-linked bonds issued later on are linked to foreign exchange only.
All index-linked bonds had imbedded call option that was executed in the past. By 2007, all index-linked bonds were either repaid or bought back so none remains in the portfolio of the Central Government Budget Debt.
This category includes bonds with variable rates and different maturities issued until 2002. Variable part of the rate was usually LIBOR, EURIBOR or TOM ("temeljna obrestna mera", which is established as a calculated average inflation from the preceding twelve months). There were two variable-rate bonds outstanding issued at the end of 2010 with no call option embedded.
None.
None.
This item includes loans extended to the Slovenian central government by commercial banks and International Financial Institutions (IFIs) as well as loans assumed by the central government from the state-owned companies or local governments.
Auctions
All government securities are issued by auctions from 2001 to 2006 on the local financial market. Since 2007, the auction method is used for Treasury Bills only, while benchmark bonds are issued via syndication.
Auctions follow the Rules of the Republic of Slovenia Government Securities' Auctions. Treasury Bills auctions are executed in a single phase by competitive bidding, using Dutch allocation algorithm. Only primary dealers for Treasury Bills may directly participate in the auctions, submitting bids for their account and for the investors' accounts. Currently, 6 domestic banks act as primary dealers for Treasury Bills. Electronic auctions are conducted using Bloomberg Auction System. Treasury Bills auctions are held according to the auction calendar.
Buybacks
Buybacks of outstanding government bonds have been introduced in 2007 following the euro changeover with the aim to consolidate the existing government bond portfolio into lesser number of benchmark size bond issuances. The scope of execution of buybacks is determined by the annual financing program, which in accordance with Article 82 of the PFA determines the criteria, the mode and the timing of buyback transactions.
Buybacks of existing bonds are executed in one phase by competitive bidding, using electronic Bloomberg Auction System based on the Rules of the Republic of Slovenia Government Securities' Auctions.
Nominal value.
Calendar year.
The total nominal amounts of government securities issuances during a fiscal year, the structure of the borrowing and the time framework are defined in the yearly financing program.
Residual maturity.
Modified duration.
The Spanish Treasury belongs to the Ministry of Economy and Finance and he is dedicated to the Public Debt issuance and management. The legal framework enables the Spanish Treasury to issue Central Government Debt. Each year, the Budgetary Law sets the annual limit to the level of outstanding debt thus implying an upper boundary to the issuance activity. The Spanish Treasury, by delegation of the Ministry of Economy and Finance, decides on the instruments to be issued and on the issuance procedures.
In addition to this, the Bank of Spain has been responsible for the management of the Book-Entry System (CADE, Central de Anotaciones de Deuda Pública) since 1987. This system has permitted the development of the Spanish Public Debt market. However, in April 2003, CADE merged with Sociedad de Compensación y Liquidación de Valores to create Iberclear, which is, since then, responsible for both keeping the Registry and for the management of the clearing and settlement of the system. Iberclear is now the property of a listed company (BME, SA or "Bolsas y Mercados Españoles").
It is worth mentioning that the Spanish Treasury only issues Central Government Debt and so, Public Debts issued by regions and cities do not fall under its direct supervision.
Regarding the delimitation of the subsector "Central Government", it matches the Base 2000 National Accounts where several institutional units previously classified in the sector Non-financial corporations have been included in central government.
Note: From 1990, the Central Administration debt is calculated according to the EU Excessive Deficit Protocol.
The Central Administration Debt includes the liabilities materialised in the instruments established in ESA 95, except "other accounts payable".
Letras del Tesoro (Treasury Bills) are zero-coupon euro-denominated securities issued at discount and with maturities up to 18 months. Letras are issued through auctions held on a biweekly basis, with 12-,18- month Letras issued each month's third Tuesday and 3 and 6 month Letras issued each month's last Tuesday.
The current framework for Letras issuance has recently undergone a process of reform. In January 2007 the Spanish Treasury auctioned 18-month Letras for the last time. In 2008, the Spanish Treasury switched to a system of monthly auctions and redemptions (before that, Letras were issued every month but fall due in even months only). But in 2010, 18-month Letras have been reintroduced under a monthly issuance schedule whereby new 18-month Letras are tapped once as 17-month instruments the following month.
None.
None.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
Bonos del Estado are fixed interest rate securities with maturities between 2 and 5 years. The Spanish Treasury currently issues 3- and 5-year Bonos del Estado. These references are issued by the Spanish Treasury through auctions that take place the first Thursday of each month. The specific Bonos del Estado that will be issued on a monthly basis is announced the day of the previous medium-term bonds auction. Bonos del Estado issued after July 1997 are strippable.
2.1.2.1.3 Long-term bonds
Obligaciones del Estado are fixed interest-rate securities with maturities longer than 5 years. The Spanish Treasury currently issues 10-, 15- and 30-year Obligaciones del Estado through auctions that take place the third Thursday of the month. The specific Obligaciones del Estado to be issued are defined, on a monthly basis, the day of the previous medium-term bonds auction. Obligaciones del Estado issued after July 1997 are strippable.
The Spanish Treasury has not included index-linked bonds in its issuance strategy. The Spanish Treasury is analyzing the opportunity of issuing linkers without any formal commitment as of now.
The Spanish Treasury has just recently resorted to this type of bond. However, it is tapped on an opportunistic basis, i.e. without any recurrent role in the annual funding strategy.
None.
None.
It includes foreign currency securities, transferable deposits, other deposits and loans. Data from 1981 to 1989 are compiled under ESA 79 methodology. Data from 1990 onwards are compiled under ESA 95 methodology.
Auctions are the procedure of issuance mainly used by the Spanish Treasury. Bonos and Obligaciones del Estado as well as Letras del Tesoro are issued through auctions. Nevertheless, the Spanish Treasury also uses other alternative methods of issuance such as syndications. This procedure is used to issue references denominated in foreign currencies and new benchmarks with maturities of ten years or longer.
The access to auctions is open to domestic and non-domestic investors. However, they must submit their bids at the Bank of Spain, directly or through a registered dealer. There are two types of bids: competitive bids, which include prices and amounts bid, and non-competitive bids which include only the amount requested at whichever average price may be awarded at the auction.
The auction procedure is based on the modified Dutch system. First, a Commission formed by representatives of the Spanish Treasury and Bank of Spain decides the amount to be issued and the minimum price (the stop-out price). Then, the weighted average price of the auction is calculated. Competitive bids at or above the minimum price are accepted, unless a prorate adjustment is made. Bids at the minimum accepted price are awarded at this price. Those bids between the minimum accepted price and the weighted average price are awarded at the bid price. Bids at prices above the weighted average price as well as non-competitive bids are allotted at the weighted average price.
The Spanish Treasury issues Bonos y Obligaciones del Estado in several tranches. The average size per line stands at around € 15 billion. The Spanish Treasury plans to increase liquidity per line up to € 16.5 billion for longer tenors, i.e. 10 years and beyond.
Face value. For risk management purposes, mainly duration analysis, market value is taken into consideration.
The fiscal year is the calendar year.
Every year, the Draft Budget Law must be presented by the government to parliament before October, with an authorization to issue debt up to a certain limit. In December, or the first months of the year, the Treasury presents its updated issuance estimates for the coming year, providing data for total gross and net issuance, issuance of bills and of bonds broken down by maturity.
Macaulay Duration.
The Swedish National Debt Office (SNDO) is the government agency responsible for the state's borrowing and debt management. This includes long-, medium- and short-term funding, liquidity management and derivative transactions.[1]
Treasury bills are issued regularly in maturities of 3 and 6 months Treasury bills with maturities up to 2 months are also issued on tap. Treasury bills are discount instruments and do not pay periodical interest. Issues are conducted in biweekly auctions through authorised dealers of the Debt Office. New 6-month bills are introduced every third month (March, June, September and December) of the year and during the other months a new 3-month Treasury bill not maturing on an IMM date are introduced.
Euro commercial papers: the size of the multicurrency programme for 1 to 365 days is USD 10 billion for authorised dealers and reverse enquiry option.
The Debt Office has an active cash management, which includes over-night borrowing, deposits and short-term Treasury bills - issued on tap - with tailor made maturities. Repo transactions in treasury bills, nominal and inflation-linked bonds, made in cash management purpose, are also included under this item.
The Debt Office issues Lottery bonds for retail investors. Lottery bonds have a long tradition in Sweden as the first bond was issued back in 1918. The bonds have drawings normally two to six times a year and the amounts of winnings have a fixed or floating base. All winnings are tax-free. Most Lottery bonds guarantee an annual amount of interest if the holder has a certain number of consecutively numbered bonds. The face value of the bonds varies from SEK 500 to SEK 1 000 and maturities range from 1 to 5 years. All Lottery bonds are traded at the Swedish Stock Exchange. The last paper-based bond was issued in 1995. Thereafter, all Lottery bonds are registered at the Central Securities Depository & Clearing Organisation (VPC).
Nominal fixed rate bonds are issued in biweekly auctions through the Debt Office's authorised dealers. In December 2010, there were 9 benchmark loans with maturities between 0.25 to 28 years. These bonds are open for issues of new tranches during the whole maturity but we usually do not issue in these bonds when they become shorter than two years. In practice, issues are primarily concentrated on more recently introduced bonds and to bonds in the 2-, 5- and 10-year segments. Issues are distributed over existing maturities, but are not formally broken down into the categories short-, medium- and long-term. The benchmark bonds pay annual, fixed coupons. As the loans are open for new issues for several years, issues are sometimes made at considerable premiums and discounts.
In December 2010, approximately 23 per cent of the national debt was denominated in foreign currencies.
The Debt Office also has a large portfolio of derivative instruments, including swaps, forwards, futures and options. These instruments are used to achieve the criteria set by the benchmark for foreign currency debt regarding maturity and currency composition. Since 1996, the Debt Office also has accomplished a considerable amount of the gross exposure in foreign currency through swaps from Swedish kronor to other currencies. Through this procedure, Swedish kronor borrowing becomes subject to foreign currency exposure. Including swaps and other derivatives, the exposure in foreign currency is in per cent of the total debt.
In December 2010, there were seven outstanding loans, with maturities up to 18 years. The inflation-linked bonds consist of one zero-coupon bond and six coupon bonds with annual payments. The zero-coupon bonds are issued at a discount. At redemption, the amount repaid will be increased in line with the change in Swedish Consumer Price Index (CPI) during the life of the bond. For the bonds paying coupons, the face value, as well as the coupon payments, is increased. Since April 1999, inflation-linked bonds have been issued through auctions. In earlier years, however, inflation-linked bonds also have been issued on tap.
National debt savings are individual bonds where each holder has his own interest conditions depending on general interest rates at the time of purchase. The bonds offer several options: maturities between 6 months up to 8 years, coupon or zero-coupon bonds, fixed or floating rate of interest and nominal rate or inflation-linked bonds. National Debt Account, the predecessor of National Debt Savings, had fixed maturity dates and the number of options were limited (i.e. no inflation-linked, no coupon bonds). Since 1997, there is no new issuance of bonds via National Debt Account.
In December 2010, 2 per cent of the foreign currency bonds consisted of private placements.
The selling techniques vary between different instruments. Nominal Treasury bonds, inflation- linked bonds and Treasury bills in Swedish kronor are sold through auctions via a primary dealer system. The Debt Office made it possible in September 2002 for private and smaller investor to take part in the regular auctions through the Internet. This possibility ended in March 2009, whereby buyers are referred to banks and brokers. Auctions of nominal Treasury bonds and Treasury bills are held every Wednesday when the respective instrument is issued every second week. Inflation-linked bonds are auctioned six times a year on Thursdays. Short-term Treasury bills and cash management instruments are issued on tap. Foreign currency bonds are normally syndicated (underwritten) issues. National debt savings are sold daily on tap and only by the Debt Office via Internet and telephone. Lottery bonds are normally issued twice a year. They are sold via dealers and directly by the Debt Office itself via mail order, telephone and Internet.
The debt is measured by adapting the principles for valuation of individual debt instruments and the limits defining which instruments are included in the debt measure to the principles applied in EU context. This means that the debt will be measured including debt management instruments and the debt instruments will consistently be valued at their nominal final value.
Since 1997, the fiscal year coincides with the calendar year. Prior to 1997, the fiscal year was from 1 July to 30 June of the following year. The transition took the form of an 18-month fiscal year between 1 July 1995 and 31 December 1996.
No estimations have been made. All figures used in these statistics are accounted figures.
The maturity of the central government debt is stated as an average interest rate refixing period. The interest rate refixing period for a given instrument is calculated by weighing the time to every future cash flow. This weighing is carried out with the nominal amounts of the cash flow in relation to the sum of all of the cash flows of the instrument. The nominal cash flows include the nominal debt amount plus coupons and expected inflation compensation. This can also be expressed as duration with a zero interest rate.
[1] Further information can be obtained from the website of the Debt Office, www.riksgalden.se.
The Swiss Confederation currently covers its funding requirements exclusively in the domestic capital markets. There is no debt issued in foreign currency. There are no statistics available as to debt held by non-residents.
Under this heading are listed the short-term money market claims that are issued on a weekly basis through an auction by tender among banks. The agent for these instruments, called "Geldmarktbuchforderungen" in German or "créances comptables à court terme" in French is the Swiss National bank. These instruments are issued with original maturities of 3, 6 and 12 months.
None.
Occasionally there were debt issues in the form of "Schatzanweisungen" or "Bons du Trésor/Rescriptions" to banks only by private placement, again through the Swiss National bank. These instruments had original maturities of up to 2 years, in some special cases up to 8 years. Since 2005, the instrument is not used any more.
2.1.2.1.1 Short-term bonds
Not applicable (see heading Long-term bonds below).
2.1.2.1.2 Medium-term bonds
Not applicable (see heading Long-term bonds below).
2.1.2.1.3 Long-term bonds
The Swiss Confederation issues bonds with maturities of up to 50 years. For many years now, the state has limited its issuing activity to public listed bonds. Since 1980, bonds are issued by tender (auction), with the Swiss National Bank acting as the agent. Bonds are considered to be long-term instruments and are not broken down into short and medium terms for statistical purposes. In addition, bonds exchangeable into Swisscom-shares (the listed Swiss telecommunications company majority owned by the government) are issued from time to time. If short-term bonds outstanding are defined as those with maturities (remaining life) of up to 1 year, medium-term bonds as those maturing within 1 to 5 years and long-term bonds as those with remaining maturities from 5 to 50 years, then the following breakdown of the outstanding bond maturities is applicable:
Outstanding Bonds
|
In millions of francs, end of |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
|
Short-term bonds (less than 1year) |
2 969 |
5 491 |
4 758 |
5 366 |
10 178 |
8 702 |
7 632 |
|
Medium-term bonds (1-5years) |
25 976 |
28 705 |
31 879 |
35 113 |
31 835 |
29 432 |
34 764 |
|
Long-term bonds (5-50years) |
63 639 |
61 303 |
59 032 |
55 205 |
50 422 |
47 985 |
39 142 |
|
Total as per Table 1 |
92 584 |
95 499 |
95 669 |
95 684 |
92 435 |
86 119 |
81 538 |
As to the issuing activity (Table 2), since 1998, only long-term bonds were issued.
None.
None.
None.
None.
Non-Marketable debt includes short-term borrowings (usually overnight funds from banks, if any), borrowings from Post Finance, the export risk insurance (SERV), the deposits on the staff savings accounts and certain other internal items.
Gross "issuance" figures for Table 2 are not available; only the net increase or decrease is disclosed therein.
There is a widespread use of the unique price tender system. The auctions are carried out via an electronic platform. At the auctions of the bonds, the Confederation usually reserves defined amounts. These amounts are called own tranches. The own tranches may be sold later directly to major market participants. There is no formal primary dealer system.
Within the framework of an asset-liability management system based on a balance sheet approach, all instruments are also valued internally on a mark-to-market basis. For public accounting and statistics as well as the purpose of the OECD survey, debt figures are displayed at nominal values.
Is calendar year.
The figures given are estimates for the cost of funds as published in the public accounts. All interest bearing market debt of the Confederation including deposits by the Post and the export risk insurance (SERV) are included in the calculation of the cost of funds. Per end of 2010, such debt amounted to SF 93 billion, with the corresponding cost of funds figure amounting to 2.89 % p.a. The cost of funds calculation takes account of all the cash flows on the debt, except for flows resulting from interest rate swap contracts.
Residual maturity.
The calculations of the Macaulay duration of the bonds of the Confederation with maturities greater than one year were from SIX Swiss Exchange until 2006. Since 2007 the Macaulay duration for the outstanding bonds and treasury bills (Debt Register Claims) is calculated internally, as it is done for the modified duration since 2005.
The Undersecretariat of Treasury is the authorised body by law for budget financing. The underlying legislation governing the procedures and principles related with domestic and external borrowing, receipt of grants, lending and extension of grant and debts, cash management in coordinated manner with fiscal and monetary policies is the "Law on Regulating Public Finance and Debt Management" (Law Number 4749, Date of enactment 28.03.2002). Under the act, the Turkish Treasury holds domestic and foreign borrowing operations.
The Law enables Treasury to carry out studies on its operational mechanism, procedures and structure to improve its risk and debt management activities, including closer coordination between domestic and foreign borrowing. More effective debt management is achieved with the system under the new law. The Law also enables Treasury to develop a short-term (up to 30 days) borrowing system from the market without issuing government securities, in full coordination with the CBT.
According to the new legislation on Public Financial Management and Control Law, the scope of central government has changed and it has mainly consists of three sub units;
1. General Budgeted Institutions
2. Special Budgeted Institutions
3. Regulatory and Supervisory Agencies.
Therefore, the data that will be sent this year (including previous years) is prepared according to new definition.
The non-marketable debt in the tables 1 and 2 reflects the loan part of the central government external debt stock. These loans comprise of programme and project credits provided from international and bilateral institutions such as IMF and World Bank, etc.
The Under secretariat of Treasury and the Central bank of Turkey are the two main institutions involved in debt management in Turkey where the Central bank of Turkey acts as a fiscal agent of Treasury. At the Treasury, the counterparts are General Directorate of Public Finance for domestic borrowing and General Directorate of Foreign Economic Relations for external borrowing.
While the General Directorate of Foreign Economic Relations act as the front office for the all borrowing operations from international markets, the General Directorate of Public Finance materialise the borrowing from the domestic markets. The redemption operations for all borrowings (either from international and domestic markets) are held by the General Directorate of Public Finance.
The Central bank of Turkey acts as an intermediary and principal paying agent for the Treasury. The Bank shall be the treasurer of the government. In this capacity, the Bank shall, in particular, execute free of charge collections and disbursements and all the Treasury operations both within the country and abroad, as well as domestic and foreign money transfers and remittances of all types on behalf of the State. Technical operations related with auction process carried out by the Central bank of Turkey on a computer network between domestic banks and Central bank.
The main objective of government debt management is to meet the government's financing needs while minimizing long-term costs. Although the immediate cost of borrowing is determined in the primary market where government securities are initially issued, the efficiency of the secondary market, where those securities are traded until maturity, has a direct effect on the functioning of the former. The terms on which the government deficit is financed are ultimately determined by the way the secondary market functions.
To enhance liquidity of government securities in the secondary markets, and to increase efficiency in the primary market, Turkish Treasury launched the primary dealership system in domestic debt securities on May 2000. Due to the volatile environment in the year 2001, Turkish Treasury temporarily discontinues the system. Afterwards, along with the stable macroeconomic equilibrium sustained, Turkish Treasury again started to practice the Primary Dealership System in September 2002. In the last eight years, the system contributed to the efficiency of both primary and secondary market of government securities. The system provided greater depth and reduced the volatility in the secondary market while it improved the implementation of borrowing strategies and risk management capability in the primary market.
In Turkey, the Treasury is responsible for the management of the national debt. It is the Treasury's mandate to borrow for the government from domestic and foreign markets, and manage the debt in a cost-effective manner. The main tool the Treasury uses to borrow in domestic markets is to hold regular auctions for government securities. Other tools such as "Tap" sales, Direct Sales and Public Offerings are also used when needed.
None.
Treasury bills (or T-bills) are short-term securities with a maturity less than one year.
None.
None.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
Instruments with maturity of 1 to 5 years.
2.1.2.1.3 Long-term bonds
Instruments with maturity of more than 5 years.
There are also indexed-linked cash and non-cash securities in domestic debt stock of Turkish Treasury. These are:
Treasury has started to issue a new CPI indexed bond in 2007. The bonds have 5 and 10 year maturity and semi-annual coupons. The inflation valuation of the principal is paid to investors at maturity. Semiannual coupon payments are protected from inflation, as well. If deflation occurs over the life time of the bond, the principal to be paid would be equal to the par.
Treasury has started to issue Revenue Indexed Bonds in 2009 through direct sales method in order to broaden the investor base and to increase domestic savings. The coupon payments of Revenue Indexed Bonds are indexed to the transfers from State Owned Enterprises to the Budget as Revenue Shares. The bonds are issued in both TL and USD.
Treasury issues 5 and 7 year Floating Rate Bonds with quarterly couponed. The coupon payments of the FRNs are based on the weighted average interest rates determined in the auctions of TL denominated discounted securities, which take place in the three month period (91 days) before the beginning of the each coupon period.
Treasury may also issue FX denominated bonds when needed.
There are also some couponed bonds at the Central Government non-cash domestic Debt stock both in TL and FX denominated.
None.
Non-marketable debt of UT comprises of credits both program and project credits. Project credits are usually provided by international institutions as well as commercial banks and governmental organizations in order to maintain a specific project. Program credits are provided by IMF and for some cases from IBRD.
The debt stock of a loan is calculated by subtracting the total principal payments from total disbursements realized until the reference date. In other words, it is the sum of the liabilities arisen from the remaining disbursements at the reference date. Debt stock of each loan is calculated according to the currency declared on the agreement, then translated to any currency value via related parity of the relevant date.
None.
Non-marketable Treasury foreign loans.
Central bank, as the fiscal agent of the Treasury, materializes the auction procedure like collecting the bids, sorting and submitting the lists to the Treasury on the auction day. Auctions of domestic debt securities are open to all investors (either institutional or individual). In general, multiple pricing system is being used in the auctions since February 2004. The bidders are required to deposit collateral by an amount of 1% of their bids on the auction day. The Primary Dealers are exempt from this payment. On the auction date, the bids are submitted by the bidders until 12:00 a.m. then; all of the bids are transferred to the Treasury by the Central bank electronically. The result of the auction is announced to the public through Reuters at the same day the auction takes place.
Primary Dealers and public agencies have the right to submit non-competitive bids prior to the announcement of auction results. If the Treasury decides to cover non-competitive bids, the amount issued through non-competitive sale before auction is announced at 11:00 a.m. on the auction date. Additionally, primary dealers have an option to buy additional securities from the average price of the auction (within the multiple price auction system) and price determined in the auction (within the uniform price auction system).
With this system, Treasury stores the securities that are offered to sales with pre-determined maturity and interest structure at the Central bank of Turkey. Only the Primary Dealer Banks have the right to buy these securities throughout the sales period. The ownership of these securities belongs to the Treasury until investors buy them. Central bank's role is the intermediation and collector within this process.
In this selling technique institutional investors, mostly public banks and public institutions, according to their cash position, demand security from Treasury. The maturity and the interest structure of the desired security are determined by the discussions between Treasury and investor. After the mutual agreement is provided, Turkish Treasury designs this security and issues it to the investor.
In order to broaden the investor base, Treasury conducts Public Offers. The Treasury determines the maturity and interest structure of the securities to be offered and sells these securities to the individual investors via Primary Dealer Banks.
The domestic debt figures reflect the net values of the securities. The foreign currency part of the domestic debt stock is revalued at each coupon payments and at the year ends.
Is calendar year.
None.
Original maturity for table 1 and table 2. Remaining maturity in table 3.
Macaulay Duration, which indicates the average interest rate fixing period for debt, is the method selected for the calculation of the duration of TL denominated cash domestic debt. The shorter the duration, the shorter is the time the interest burden on the debt stock will vary due to market movements. The term rate is the yield to maturity at time of issuance. For zero-coupon securities, duration is equal to term to maturity. For variable (floating) rate bonds, duration is calculated as the time to next interest rate fixing date.
Once the durations of each security is calculated, the overall duration of the debt stock is computed by averaging these based on their proportions in the debt stock.
On 6 May 1997, the Chancellor of the Exchequer announced the government's intention to transfer responsibility for sterling debt and cash management from the Bank of England to Her Majesty's Treasury (HMT). On 1 April 1998, responsibility for debt management was transferred to the UK Debt Management Office (DMO), an executive agency of HMT. The DMO's key debt management objective is to minimise over the long term the cost of meeting the government's financing needs, taking into account risk, whilst ensuring that debt management policy is consistent with the aims of monetary policy. Responsibility for cash management was transferred to the DMO on 3 April 2000. The DMO's key cash management objective is to smooth, in a cost-effective way, the forecast net daily Exchequer cash flows.
Following a review of the arrangements and future requirements for government debt and asset management, HM Treasury announced on 25 March 2002 that the activities of the Public Works Loan Board (PWLB) and the Commissioners for the Reduction of the National Debt (CRND) (see below) were to be integrated with the DMO. The reorganisation, which was designed to deliver improved management of the central government balance sheet and to offer a more robust, flexible and innovative service to public sector clients, took effect on 1 July 2002.
The PWLB lends to local authorities for capital purposes. The CRND's principal function is managing the investment portfolios of certain public funds.
The UK government bond market operates as a primary dealer system. As at 31 March 2011, there were 20 firms recognized as primary dealers (GEMMs) by the DMO. Each GEMM must be a member of a recognised investment exchange (in practice the London Stock Exchange) and undertakes a number of market-making obligations, in return for certain privileges.
In broad terms, the obligations of a GEMM are to participate actively in the DMO's gilt issuance programme, to make effective two-way prices on demand in all non-rump gilts to recognised clients, and to provide price, position and turnover data to the DMO, as well as information on market conditions.
The privileges of GEMM status are:
i) Exclusive rights to competitive direct bidding at gilt auctions and taps, either for the GEMM's own account, or on behalf of clients. In 2007-08, the DMO introduced an electronic bidding system for its gilt auctions.
ii) Access to a non-competitive allowance at outright auctions.
iii) Facilities to strip gilts.
iv) An invitation to quarterly consultation meetings with the DMO, allowing the GEMMs to advise on the gilt(s) to be issued at scheduled auction dates in the following quarter, and to discuss other market-related issues.
v) Exclusive access to gilt Inter-Dealer Broker (IDB) screens (see below).
In addition, any transactions undertaken by the DMO in the secondary market or for market management purposes are only carried out with or through the GEMMs, the DMO's gilt market dealing counterparties.
All of the 20 recognized GEMMs are also listed as Index-linked Gilt-edged Market Makers (IG GEMMs) as of 31 March 2011.
There are five specialist gilt Inter-Dealer Brokers (IDBs) operating in the gilt market. Their broking services are limited to the GEMM community. Their main purpose is to support liquidity in the secondary markets by enabling the GEMMs to unwind anonymously any unwanted gilt positions acquired in the course of their market-making activities. All but a few inter-GEMM trades are executed through an IDB.
Each IDB is registered with the London Stock Exchange (LSE) and endorsed by the DMO. The DMO monitors this segment of the market on an ongoing basis to ensure that an IDB service is available to all GEMMs on an equitable basis and that the market maker structure is effectively supported by the IDB arrangements.
The IDBs are also subject to specific conduct of business rules promulgated by the LSE. For example, they are prohibited from taking principal positions or from disseminating any market information beyond the GEMM community.
The London International Financial Futures and Options Exchange (LIFFE), a subsidiary of euronext LIFFE, lists three gilt futures contracts, with differing maturity baskets: short (1½-3¾ years), medium (4-6 years) and long (8¾-13 years). The contract's specifications are: the contract is quoted in decimals (to £0.01), the notional size of each contract is £100,000, and the notional coupon is 6%, with a minimum outstanding amount of £1,500,000,000.
The delivery cycle of the contract is March, June, September and December. The contracts can be delivered on any business day in the delivery month.
LIFFE also offers Short Sterling contracts. Sixteen delivery months are listed at any one time (plus the two nearest serial months) and market participants can trade short-term sterling interest rates up to 4 years ahead. As with the gilt contracts, the main delivery months are March, June, September and December, with delivery on the 3rd Wednesday in the month. The unit of trading in short sterling futures is £500,000 and the minimum price movement is £0.01. The price quoted is 100 minus the implied rate of interest of 3-month sterling deposits, as determined on the contract's last day of trading by the British Bankers' Association Interest Settlement Rate (BBAISR).
Dealing in gilts is investment business under the Financial Services Act 1986. The Financial Services Authority (FSA) regulates the conduct of firms that undertake such business and supervises the investment exchanges on which dealing in gilts, or in futures and options in gilts, takes place. Dealing in gilts and gilt derivatives also takes place off-exchange.
All GEMMs and IDBs (see above) are authorised, either by the FSA or, in the case of firms from other EEA states, by their home state regulator, to undertake such business.
The FSA recognises investment exchanges that meet the recognition requirements in Schedule 4 to the Act. It also supervises Recognised Investment Exchanges (RIEs) to ensure that they comply with those requirements. The LSE and LIFFE are both RIEs.
Although the gilt market is largely a telephone market, all coupon-bearing gilts and gilt strips are required to be listed on an RIE, traditionally the LSE. GEMMs and IDBs must be members of the LSE and registered with the exchange in that capacity.
The LSE has a number of specific rules covering the operations of GEMMs and IDBs. In addition, all members of the LSE are covered by its general rules on the conduct of business. Consequently, all gilt trades, other than stock loans and repos, executed by members of the LSE must be reported to the LSE and are considered to be "on-exchange".
The on-exchange gilt market of the LSE and the LIFFE markets have been designated as regulated markets for the purposes of the EC Investment Services Directive.
Treasury bills are short-term, marketable instruments issued by the government. Treasury bills do not pay coupons. They are issued at a discount; that is, they are issued at less than their nominal value and investors are repaid at their nominal value (par) on maturity. Although bills with a maturity of 28 days (1 month), 91 days (3 months) and 182 days (6 months) are currently the norm, they may be issued with maturities of between 1 and 364 days. From mid-September 2003, Treasury bills became dematerialised. Dematerialisation means that Treasury bills are fungible with Treasury bills of the same maturity date. Treasury bills are eligible for inclusion in the main traded category of gilt Delivery by value (DBV), the Unstripped British Government (UBG) class, so Treasury bills can be used as collateral for bilateral gilt repo transactions. Treasury bills remain eligible as collateral for the Bank of England's Open Market Operations and in Real Time Gross Settlement system. (RTGS)
Treasury bills are shown using nominal (face) values.
None.
The Bank of England issues non-sterling Treasury bills. None have been issued by the central government since 1998.
A conventional gilt is a guarantee by the government to pay the holder of the gilt a fixed cash payment (coupon) every 6 months until the maturity date, at which point the holder receives the final coupon payment and the return of the principal. The coupon rate usually reflects the market interest rate at the time of the first issue of the gilt. There are three coupon series for conventional gilts, 7 March/7 September and 7 June/7 December (which is strippable) and 22 January/22 July (which was introduced in August 2009 and is not strippable at the current time).
In the past, the government has issued double-dated gilts with a band of maturity dates. The government can choose to redeem these gilts, in whole or in part, on any day between the first and final maturity dates, subject to giving at least 3 months' notice. Double-dated gilts tend to be less liquid than other conventional gilts due to the greater uncertainty over the redemption date. Because of their age, they also tend to have higher coupons. These gilts have been targeted in the past as source gilts for conversion offers into new current-coupon benchmarks and now account for only a very small proportion of the gilt portfolio (under 0.5%). The two remaining double-dated gilts have been classified as "rump" gilts since 13 March 2006 (see below).
There are eight undated gilts still in issue (comprising less than 1% of the portfolio). These are the oldest remaining gilts in the portfolio, some dating back to the nineteenth century or earlier. All of these gilts have a first redemption date, but no final redemption date, and so the redemption of these bonds is at the discretion of the government. Due to their age, they all have low coupons and so there is little current incentive for the government to redeem them. Most undated gilts pay interest twice a year; however, some pay interest four times a year.
Undated gilts are included in the "long-term bonds" category.
A "rump" gilt is one declared by the DMO as having "rump" status, in which GEMMs are not required to make two-way markets. The current list of rump gilts is available on the DMO website at www.dmo.gov.uk. Rump gilts are those that have been reduced in size to less than £850 million (nominal) in issue. The government will not sell further amounts of "rump" gilts to the market, but the DMO is prepared, when asked by a GEMM, to bid a price of its own choosing for such gilts.
Index-linked gilts differ fundamentally from conventional gilts in that the semi-annual coupon payments and the principal are adjusted in line with the UK Retail Prices Index (RPI). This means that both the coupon payments and the principal payment on redemption are adjusted to take account of accrued inflation since the gilt's issue. Hence, (assuming positive inflation) the nominal amount outstanding of index-linked gilts is less than the redemption value the government will have to pay on maturity.
Each coupon payable on index-linked gilts consists of two elements:
The UK was the first G7 government to issue index-linked bonds for institutional investors, with the first issue taking place in 1981. The first new index-linked gilt for a decade (2% Index-linked Treasury Stock 2035) was issued in July 2002. All new index-linked gilts first issued from July 2005 will adopt the 3-month lag structure pioneered by the Canadian government in 1991. As with conventional gilts, the coupon on index-linked gilts reflects borrowing rates available at the time of first issue. However, index-linked coupons reflect the real borrowing rate for the government. Consequently, there is a much smaller variation in index-linked coupons, reflecting the smaller variation in real yields over time.
The main difference between floating rate gilts (FRGs) and conventional gilts is that for FRGs each coupon is set in line with short-term interest rates. As of 31 March 2011, there were no FRGs in the portfolio; the last FRG matured in July 2001.
These are liabilities (fixed or floating rate) issued by the Bank of England, on behalf of the UK government, in currencies other than sterling[1]. There are currently no foreign currency liabilities.
National Savings & Investments (NS&I), also an executive agency of HMT, is responsible for marketing government debt to the retail market by means of non-marketable investment products including premium bonds, income bonds, guaranteed equity bonds and savings accounts. Its main aim is to reduce the cost to the taxpayer of government borrowing now and in the future. To achieve this, NS&I's strategic objective is to provide retail funds for the Government that are cost-effective in relation to funds raised on the wholesale market.
Non-marketable bonds: The government issues non-marketable bonds ("NILO" stocks) to the CRND, the public body responsible for managing various funds on behalf of the government. NILO stocks are issued by the Treasury on the same terms as the original stock issue to which they relate, being distinguished from the "parent" stock by the addition of the name (NILO) in the title. They are identical with the parent stock in all respects except that they are not quoted on the Stock Exchange. All transactions in NILO stocks are dealt with on the basis of the current market price of the parent stocks. NILO stocks that are no longer required by CRND may be repurchased and cancelled by the Treasury before the normal maturity date.
Treasury bills are issued through a tender process. Tenders are currently held on the last business day of each week for settlement on the next business day. The DMO issues a notice outlining the maturities of Treasury bills available in each week of the next quarter after the final tender of the preceding quarter. The precise quantities of Treasury bills on offer and the maturity of bills on offer in each week will be announced one week prior to the relevant tender. In February 2010, the DMO switched to using an electronic bidding system at its Treasury bill tenders.
The DMO currently issues bills with maturities of 28 days (1 month), 91 days (3 months) and 182 days (6 months) and 364 days (12 months)[2]. If Treasury bills are due to be issued or settle in weeks containing Bank Holidays, the exact maturity of the bills at issue may be adjusted to ensure repayment on the first business day of the relevant week. Bills with less than 28 days to maturity can be made available at ad hoc tenders (see below)
The DMO may also issue shorter maturity Treasury bills (up to 28 days) at ad hoc tenders as part of its Exchequer cash management operations. The objective of ad hoc tenders is to provide additional flexibility for the DMO in smoothing the Exchequer's cash flows that the regular tender programme may not provide. Treasury bills issued as a result of ad hoc tenders are identical in every respect with those issued by way of regular tenders.
In addition to the scheduled weekly tenders and ad hoc tenders, the DMO may re-open on request existing issues of Treasury bills on a bilateral basis, to raise funds for cash management.
Full operational details are set out in the DMO's publication "Exchequer Cash Management: Operational Notice and Treasury Bill Information Memorandum", available on the DMO's website www.dmo.gov.uk.
Auctions are the primary means by which the UK government issues gilts to meet its financing requirement. However, two supplementary methods for issuing gilts have been introduced; mini-tenders and syndications. Mini-tenders were first introduced in the third quarter of 2008-09 and are generally half the size of conventional and index-linked gilt auctions of equivalent maturity. Mini-tenders are used to issue long-dated conventional and index-linked gilts and are conducted using a single price format (although there is the option to use multiple price format for conventional mini-tenders). Syndications, introduced in the form of a programme in 2009-10, are used to issue long-dated conventional and index-linked gilts.
The government also retains the flexibility to tap both index-linked and conventional gilts for market management reasons.
An annual auction calendar for the financial year ahead is published alongside the Budget by HM Treasury in the Debt and Reserves Management Report. On a quarterly basis (following consultation with gilt market participants), the DMO announces the gilts it proposes to auction in the following quarter and confirms the dates of the auctions. On the Tuesday of the week before the week of an auction, the amount of the gilt to be auctioned is announced (and if it is a new gilt, the coupon) and the prospectus and application form for the sale is published. At this point, the gilt is listed on the LSE and "When-Issued" trading commences [3].
The use of a pre-announced auction schedule reflects the government's commitment to the principles of transparency and predictability in gilt issuance. A transparent and predictable approach to gilt issuance should reduce the amount the government is charged for market uncertainty (the "supply uncertainty premium"). Predictability should also allow investors to plan and invest more efficiently (in the knowledge of when and in what maturity band supply will occur).
The government uses two different auction formats to issue gilts:
The two different formats are employed due to the differences in the risks involved to the bidder for the two different types of security.
Conventional gilts are viewed as having less primary issuance risk. There are often similar gilts already in the market to allow ease of pricing (or, if more of an existing gilt is being issued there is price information on the existing parent bond); auction positions can be hedged using gilt futures; and the secondary market is relatively liquid. This suggests that participation is not significantly deterred by bidders not knowing the valuation placed on the gilts on offer by the rest of the market. A multiple price auction format also reduces the risk to the government of implicit collusion by strategic bidding at auctions.
In contrast, positions in index-linked gilts cannot be hedged as easily as positions in conventional gilts. The secondary market for index-linked gilts is also not as liquid as for conventional gilts. Both of these factors increase the uncertainty associated with index-linked auctions and increase the risk of the "Winner's Curse" for successful bidders - that is the cost of bidding high when the rest of the market bids low. Uniform price auctions thus reduce this uncertainty for auction participants and encourage participation. In addition there are fewer index-linked gilts than conventional gilts in issue, so pricing a new index-linked issue may be harder than for a new conventional.
GEMMs have access to a non-competitive bidding facility under both formats. GEMMs are each entitled to a combined non-competitive allowance of 10% of the total amount of the gilt on offer at a gilt auction. If applied for, these bonds are allocated at the average accepted price of successful competitive bids in conventional gilt auctions, and at the single strike price in index-linked auctions. In conventional auctions, the 10% allowance is split evenly amongst all GEMM firms, whereas in index-linked auctions each firm's individual allowance will be determined by their successful purchases at the three previous auctions.
In 2009-10, the DMO introduced the Post Auction Option Facility (PAOF) which gives successful bidders at auctions (both GEMMS and investors) the option to purchase up to an additional 10 per cent of the amount allocated to them at the auction. The additional stock, if taken up, is allocated at the average accepted price at conventional gilt auctions and the clearing (strike) price at index-linked gilt auctions. Details of the facility are set out in the DMO's gilt market operational notice available on the DMO's website www.dmo.gov.uk.
The DMO will only use taps of both conventional and index-linked gilts for market management reasons, in circumstances where the DMO judges there to be excess demand in a particular gilt or sector, temporary or otherwise, such that the secondary market has become, or is likely to become, dislocated. A tap was last held on 6 August 1999. Reverse taps, where the DMO buys in and cancels gilts for purposes of market management are also possible, but to date have never been used.
In addition to the above operations, the DMO may occasionally build up existing gilts through a conversion offer or a switch auction, where gilt holders are offered the opportunity to convert or switch their holding of one gilt into another at a rate of conversion related to the market prices of each gilt. In both cases, the main purposes of these operations are to:
Acceptance of such offers is voluntary and gilt holders are free to retain their existing gilt although this is likely to become less liquid (i.e. traded less widely, with a possible adverse impact on price) if the bulk of the other holders of the gilt choose to convert their holdings. Should the amount outstanding of a gilt be too small to expect a two-way market to exist, the DMO is prepared, when asked by a GEMM, to bid a price of its own choosing for the gilt. In addition, the DMO would relax market-making obligations on GEMMs in this "rump" gilt. The DMO would announce if gilts were to take on this "rump" status.
Switch auctions are held only for a proportion of larger gilt that is too large to be considered for an outright conversion offer. The DMO ensures that a sufficient amount of the source gilt remains for a viable, liquid market to exist following a switch auction.
Switch auctions are not used as a means to issue entirely new gilts to the market. The destination gilt of a switch auction would need to have been auctioned outright at least once prior to any switch auction.
Full operational details are set out in the DMO's Operational Notice, "Official Operations in the Gilt-edged market", available on the DMO's website www.dmo.gov.uk.
Money market instruments are shown as nominal values; bonds are shown at market value. Non- marketable debt is measured using market values. All totals are total amounts outstanding including holdings by the public sector (including central government), and are rounded to the nearest £1 million.
The breakdown of resident and non-resident holders in Table 5 of the "International Comparisons" chapter as well as the item "Marketable debt held by non-residents" in Table 1, refer to the holders of domestic currency government bonds only.
Data on marketable debt in table 2a of the present publication differ from the sum of the two items "resident and non-resident marketable debt" in table 5 because two sources are used to generate these data. Data in table 2a come from Her Majesty's Treasury and the data in table 5 from the Office of National Statistics.
Runs from April to March. In Table 2, gross and net issuance data are for financial years (note that the data in Table 1 are for end calendar years). For example, 1998 data relates to the financial year from 1 April 1998 to 31 March 1999.
None.
Residual maturity.
For the memo items in Table 1: weighted average maturity is calculated over all domestic marketable government bonds excluding undated gilts; for the weighted average yield calculation, all fixed rate domestic marketable government bonds are used, i.e. excluding index-linked bonds and variable rate notes. For the latter, in this context index-linked gilts whose final cash flows have been fixed are classed as conventional bonds and are included in the average yield (and also duration) calculations.
Duration calculations are based on end-calendar year and exclude index-linked gilts; the latter are typically measured with respect to real yields, whereas duration for non index-linked instruments is measured with respect to nominal rates. Hence, in order to ensure that a comparison is made on a like- for-like basis, it is not appropriate to combine index-linked and conventional bonds' duration statistics directly. In this context index-linked gilts whose final cash flows have been fixed in nominal terms trade with respect to nominal yields and are included in the duration calculations.
Duration statistics are calculated on marketable government (non index-linked) bonds only.
Weighted average term of maturity of domestic marketable government bonds in Table 3 is calculated over all gilts (including index-linked) excluding undated gilts.
[1] The Bank of England also issues foreign currency securities on its own behalf (to finance its own pool of foreign exchange reserves). These securities are separate from any UK foreign currency liabilities which the Bank of England issues on behalf of the UK government.
[2] Although as at end of March 2011, no bill exceeding 6 months maturity had been issued.
[3] When-Issued trading: This is the forward trading of the gilt to be sold at the auction. When-Issued trades settle on the auction's settlement date and the process helps reveal price information in the run-up to the auction.
The US Treasury issues bills on a regular weekly basis. Regular Treasury bill offerings are available in 4-, 13-, 26-week maturities. Cash management bills are issued as needed and may vary in maturity from one day to as long as a year. Treasury bills are sold at discount and do not pay interest at intervals. The 52-week bill was re-introduced in June 2008. The bills are offered every four weeks, concurrently with the 4-week bill.
None.
None.
2.1.2.1.1 Short-term bonds
None.
2.1.2.1.2 Medium-term bonds
Securities with maturities from 2 to 5 years are referred to as "notes"; 2-, 3- and 5-year maturities are currently offered monthly. All Treasury notes and bonds pay interest at 6-month intervals. The interest rate is determined in the auction of the security. Marketable Treasury securities are offered in single price auctions.
2.1.2.1.3 Long-term bonds
For this survey, long-term securities have a maturity greater than 5 years. Treasury currently offers monthly 7- and 10-year notes, and 30-year bonds. These securities also pay interest in 6- month intervals based on the rate determined in the auction.
Treasury began offering Treasury Inflation Protected Securities (TIPS) in January 1997, and currently offers maturities of 5-, and 10-year notes, and 30-year bonds. These securities pay interest at 6-month intervals. As announced in the November 2009 Quarterly Refunding policy statement, Treasury re-introduced the 30-year TIPS bond and eliminated the 20-year TIPS bond. The interest payment and principal adjusts in value with a 3-month lag; tracking changes in the consumer price index calculated by the US Labor Department. The inflation adjustments are added to the principal of the notes and are payable at maturity.
None.
None.
The gross issuance amount is the Y-O-Y change in net issuance plus accruals. Currently savings bonds are offered with both fixed and inflation-linked rates. They may be purchased in USD 50, USD 75, USD 100, USD 200, USD 500, USD 1000, USD 5000 and USD 10000 denominations. The maximum purchase amount in a given calendar year is USD 5000. Savings bonds may also be purchased and held electronically in Treasury Direct. Beginning May 2005, newly issued Series EE bonds will earn fixed rates. The new fixed rate will apply for the 30-year life of each bond, which includes a 10-year extended maturity period; unless a different rate or rate structure is announced and applied at the start of the extension period. Series EE bonds issued prior to 1 May, 2005, will continue to be governed by the terms in effect when they were issued. If redemption of EE/E Bonds occurs in the first 5 years, the 3 most-recent months' interest has to be forfeited. Series I bonds earnings are added to the bond each month and interest is compounded semi-annually. The earnings rate of I Bonds is a combination of two separate rates: a fixed rate of return and a semi-annual inflation rate. A fixed rate applies to all bonds to be issued during the 6 months from the date of the announcement. The semi-annual inflation rate is also announced every May and November and is based on changes in the Consumer Price Index for all urban consumers (October through March, April through September). The semi-annual inflation rate is then combined with the fixed rate of an I Bond to determine the bond's earnings rate for the next 6 months. I Bonds earn interest for up to 30 years.
SLGS--The State and Local Government Series (SLGS) securities program was established in 1972 as the result of federal legislation enacted in 1969 which restricted state and local governments from earning arbitrage profits by investing bond proceeds in higher yielding investments. SLGS securities are offered for sale to issuers of state and local government tax-exempt debt to assist with compliance of yield restriction or arbitrage rebate provisions of the Internal Revenue Code. Subscribers may invest in time deposit or demand deposit types of securities.
Marketable securities are offered in single price auctions. There is a minimum amount required, currently USD 100, and maximum amounts that any one participant may take of an auction, details of the process appear in the Offering Circular. Savings bonds are sold to U.S. citizens, residents, and workers of any age with a valid US social security number.
At nominal value.
Ends on 30 September.
None.
The average term to maturity is the average maturity of interest bearing total marketable debt outstanding as of the end of the fiscal year.
Belgium, France, Italy, Luxembourg, Netherlands, Germany, Denmark, Ireland, United Kingdom, Greece, Spain, Portugal, Austria, Sweden, Finland
European Union as of 1995-2004 (April).
"Total Central Government Debt" refers to the State sector which used to be larger than the Central Government sector when in the former some State-owned public corporations were included. Central Government and the State sectors can be now considered almost equal, encompassing all the Central budget units.
Until 2006, only bonds with maturities greater than one year are included in the calculation of the Macaulay duration. Since 2005, all marketable debt is included for the modified duration. And since 2007, all marketable debt is included in the calculation of both duration and average term to maturity.
Until 2006, only bonds with maturities greater than one year are included in the calculation of the Macaulay duration. Since 2005, all marketable debt is included for the modified duration. And since 2007, all marketable debt is included in the calculation of both duration and average term to maturity.
Until 2006, only bonds with maturities greater than one year are included in the calculation of the Macaulay duration. Since 2005, all marketable debt is included for the modified duration. And since 2007, all marketable debt is included in the calculation of both duration and average term to maturity.