Título 2019 Annual Borrowing Plan January 2019
Content I. Executive Summary II. Public Debt Policy of the Federal Government III. Financing Needs and Strategy IV. Portfolio Risk Analysis V. Debt Policy of the Public Sector VI. Final Remarks 1
I. Executive Summary The Annual Borrowing Plan (ABP) presents the main elements of the public debt policy of the Federal Government and for the main debt issuers of the Public Sector . The public debt policy is oriented to cover the Federal Government’s financing needs at the lowest possible cost , preserving an adequate level of risk , given the characteristics of Mexico’s public finance. The debt management policy will be guided by the principles of transparency and fiscal sustainability . 2
II. Public Debt Policy of the Federal Government 1. Cover the Federal Government’s financing needs at reduced costs, at a long-term horizon and at a low level of risk. 2. Preserve the diversity of access to a wide range of debt markets, favoring the domestic market. 3. Promote liquid and deep markets with yield curves that facilitate access to financing for a wide spectrum of public and private market participants. 3
II. Public Debt Policy of the Federal Government • • Public Sector Borrowing Requirements* Historical Balance of the Public Sector (% of GDP) Borrowing Requirements 50 (% of GDP) 5 48 4 46 3 48.7 4.5 44 2 4.0 46.5 45.8 45.3 45.3 45.3 45.2 45.1 45.0 44.9 2.8 2.5 2.5 2.4 2.3 2.3 2.3 2.2 42 1 42.6 1.1 0 40 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 *Estimates for 2018 and onwards. Source: General Economic Policy Guidelines for 2019. 4
II. Public Debt Policy of the Federal Government International Comparison of Public Debt Public debt in Mexico compares favorably to other economies, both advanced economies and • emerging markets. IMF Estimates of Gross Public Debt International Comparison of Public Debt (% GDP) (% GDP) Emerging Economies Mexico* 120 70 100 65 60 80 55 60 50 40 45 20 IMF Forecasts 40 0 USA Advanced ecs. Spain France Brazil Canada Latin America Germany Malaysa Mexico G20 Emerging Colombia Peru Chile Russia 35 2009 2011 2013 2015 2017 2019 2021 2023 *This measure of gross debt is consistent with its net value (HBPSBR) reported by the Ministry of Finance. Source: IMF. Fiscal Monitor, October 2018. 5
III. Federal Government's Financing Needs Financing Needs Federal Government’s Financing Needs (Billion pesos and % of GDP) The Federal Government’s 2018 e 2019 e Change Financing Needs for 2019 Bn pesos % GDP Bn pesos % GDP % GDP amount to 7.2% of GDP . This figure is a result of the following TOTAL (A + B) 1/ 1,706.7 7.2 1,800.5 7.2 -0.0 elements: A. Deficit 489.5 2.1 485.3 1.9 -0.1 B. Amortizations 1,217.2 5.2 1,315.1 5.3 0.1 1. Federal Government’s deficit of 1.9% of GDP External 42.6 0.2 91.0 0.4 0.2 Bonds 14.1 0.1 73.7 0.3 0.2 IFIs 25.1 0.1 13.4 0.1 -0.1 2. Debt amortizations of 5.3% Other 3.5 0.0 3.9 0.0 0.0 of GDP Domestic 1,174.5 5.0 1,224.1 4.9 -0.1 Securities 1,165.7 4.9 1,218.6 4.9 -0.1 4.9% of GDP for • Cetes 701.6 3.0 734.5 2.9 -0.0 domestic debt Bondes D 50.4 0.2 91.2 0.4 0.2 amortizations Bonds 377.3 1.6 207.1 0.8 -0.8 Udibonos 36.5 0.2 185.8 0.7 0.6 8.8 0.0 5.5 0.0 -0.0 Other liabilities 2 0.4% of GDP for • 1/ Total figures may not add up due to rounding. 2/ This item accounts for the net financing needs of the pension system (SAR). external debt e/ Estimates for 2018 and 2019. amortizations Source: Ministry of Finance. 6
III.2 Financial Strategy for 2019. Domestic Debt Government The government securities auction program will maintain the • Securities flexibility to adapt to the prevailing conditions in financial markets. Auction During 2019, the convenience of performing new syndicated auctions • New will be analyzed to introduce new references for 3 and 5-year fixed- References rate bonds and 3 and 30-year Udibonos . As part of the 2019 strategy, carrying out liability management • operations will be considered. Among these operations, the following Liability stand out: exchange transactions, repurchases, and joint repurchases Management Operations with additional issuances. The Ministry will seek to carry out at least one operation per quarter. The financial strategy considers continuing to strengthen the Market • Market Makers Program with the objective of increasing liquidity in the local Makers debt market. Financial inclusion will continue to be fostered through the sale of • securities directly to individuals, which is in line with the announced Cetesdirecto actions that seek to strengthen the financial sector. 7
III.2 Financial Strategy for 2019. Domestic Debt The Federal Government will continue to place fixed-rate bonds for 3, • Fixed-rate 5, 10, 20 and 30-year terms with the same frequency it has done Bonds over the last years and with a retap policy. The inflation-linked bonds will continue to be placed every 4 weeks • Inflation- for 3, 10 and 30-year terms . The market will continue to hold regularly linked Bonds a price reference for those instruments. During 2019, the Ministry will continue to announce quarterly the • Cetes minimum and maximum amounts to be placed every week for 28, 91, 182, and 365-day Cetes . For 2019, the Ministry will continue to auction Bondes D for 5-year • terms . The placements will continue to be carried out every 15 days , Bondes D and the new references will be opened with the same frequency as it has been done in previous years. 8
III.2 Financial Strategy for 2019. External Debt External financing will only be used as a complementary • External Financing source . The Federal Government will consider to seek financing in the • External international financial markets only when favorable conditions Markets prevail. The Ministry will consider carrying out liability management • Liability operations focused on reducing the financial cost, strengthening Management the debt portfolio structure, and reducing the refinancing risk in Operations the following years. The Ministry will continue to access financing through • International Financial Institutions and multilateral creditors IFIs and ECAs (Exporting Credit Agencies) as a complementary source of resources for the Federal Government. 9
IV. Portfolio Risk Analysis Exchange rate risk Interest rate risk The greater part of the government securities The greater part of the Federal Government issued in the local market is held at fixed rate debt is denominated in pesos. At the end of and long-term (81.7%). Additionally, 100% of the 2018, 77.1% of the Federal Government debt will external market debt has a fixed rate. be denominated in local currency. Long-term Fixed-rate Government Securities, Nominal Federal Government’s Net Debt (% of Total) and Inflation-linked (% of Total) 100 100 18.7 19.2 18.3 18.7 17.8 16.7 18.0 18.8 18.3 18.0 18.7 19.0 20.8 22.7 25.0 23.9 22.9 90 90 19.6 19.7 20.1 21.1 21.9 26.0 26.6 32.6 33.0 80 80 47.2 43.5 40.2 70 70 60 60 50 50 81.3 80.8 81.7 81.3 82.2 83.3 82.0 81.2 81.7 79.9 82.0 80.4 81.3 78.9 80.3 81.0 79.2 77.3 75.0 40 40 78.1 77.1 76.1 74.0 73.4 67.0 67.4 30 30 52.8 56.5 59.8 20 20 10 10 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20172018e/ 2004200520062007200820092010 2011 2012 2013 2014 2015 2016 2017 2018e/ Domestic Foreign Others 1-year Cetes + Fixed Rate Bonds (nominal and CPI-linked) 10 Source: Ministry of Finance.
IV. Portfolio Risk Analysis Refinancing Risk The Federal Government has reduced its refinancing risk by maintaining a portfolio where long-term instruments prevail. Average Maturity and Duration of Federal Average Maturity and Duration of Federal Government’s Domestic Securities Government’s External Market Debt (Years) (Years) 9 25 Average maturity Average maturity 8.1 8.1 8.0 7.9 7.9 8.0 8.0 21.7 8 Duration 7.6 20.8 21.1 Duration 7.2 19.4 20 19.0 7 6.5 6.3 16.5 16.5 6 5.7 15.3 5.2 5.1 5.1 5.0 5.0 4.9 15 4.8 4.6 4.6 13.4 5 4.3 3.9 3.9 4 10.1 3.5 9.5 9.2 3.4 9.0 10 8.7 2.9 3.0 8.2 7.9 7.6 3 7.4 2.3 1.7 2 5 1 0 0 2004200520062007200820092010 2011 2012 2013 2014 2015 2016 2017 2018e/ 2010 2011 2012 2013 2014 2015 2016 2017 2018e/ Source: Ministry of Finance. 11
IV. Portfolio Risk Analysis Refinancing risk The Federal Government has reduced its refinancing risk by preserving a portfolio where long-term instruments prevail. Amortization Profile of the Federal Government’s Amortization Profile of the Federal Government’s Domestic Debt* External Debt* (billion pesos) (billion dollars) 700 632 577 600 499 499 500 400 295 300 200 100 0 2019 2020 2021 2022 2023 Bonds Udibonos Bondes D Other *The amortization profiles consider the outstanding debt as of September 2018. Domestic debt amortization profile does not include Cetes. Source: Ministry of Finance. 12
Recommend
More recommend
