PUBLIC SECTOR DEBT COMPOSITION Public Debt Office Ministry of - - PowerPoint PPT Presentation

PUBLIC SECTOR DEBT COMPOSITION

Public Debt Office Ministry of Finance

October 2019

2 Sources: Public Credit General Office Note: Preliminary figures, subject to rectification.

EVOLUTION OF THE NFPS DEBT

As of August 31st, 2019, the NFPS debt (including debt with the Central Bank) amounted US$34,399.1 million, representing the 39.1% of GDP projected for the year.

24.2% 24.4% 22.8% 23.2% 23.5% 25.2% 26.3% 7.8% 6.4% 7.0% 8.4% 9.8% 9.2% 9.8% 5.0% 4.5% 4.1% 3.7% 3.6% 3.2% 3.0% 37.0% 35.4% 33.9% 35.3% 36.9% 37.6% 39.1% 2013 2014 2015 2016 2017 2018 Aug-19

NFPS Debt Evolution 2013- August 2019 (% GDP)

External Debt Internal Debt Intragovernmental Internal Debt

3

Of the total NFPS debt of US$ US$33,399.1 million, US$23,140.3 million is external debt, US$8,647.4 million is domestic and US$2,611.5 million, intragovernmental debt. On the other hand, the debt of the NFPS is composed of 30% and 48% of debt instruments in domestic and external bonds, respectively, 13% is contracted with multilateral organizations and 5% with bilateral institutions, to name the main ones.

DEBT COMPOSITION BY CREDITOR

Sources: Public Credit General Office Note: Preliminary figures, subject to rectification.

External Debt , US$23,140.3, 67.3% Domestic Debt, US$8,647.4, 25.1%

Intragovernmental Debt, US$2,611.5, 7.6%

NFPS Debt Composition

Domestic Bonds, US$7,896.4, 23.0% CB Recap Bonds, US$2,586.2, 7.5% External Bonds 48.2% Multilaterals, US$4,614.6, 13.4% Bilateral , US$1,887.0, 5.5% Commercial Banks and Suppliers, US$846.1, 2.5%

Composition By Creditor Type

DEBT MANAGEMENT STRATEGY

Indicators Target 2020 Dec-18 Aug-19 Exchange Rate Risk % FX Debt 77% ± 3% 74.8% 71.2% Refinancing Risk % Short Term Debt ≤12% 8.8% 5.8% ATM Domestic Debt 7 ± 1 years 7.0 7.1 Interest Rate Risk % of debt that refixes rates within a year 17% ± 3% 20.7% 17.3%

1 / The scope of the Debt Management Strategy does not include the bonds issued by the Central Government for the recapitalization of the Central Bank, since these instruments are not available for the new financing. These indicators therefore exclude such instruments.

• Prioritization of fixed rate instruments in local
• currency. Reduction of exchange risk.
• Creation of more liquid benchmark series with the

use of reclosures Development of the Domestic Capital Market

• Access to different markets.
• Capital increase in multilateral organizations

Diversification of Financing Sources

• Increase the average maturity of the portfolio. Use
• f series to 10 and 15 years.

Extending Domestic and International Curves

• Smooth the profile of maturity.
• Modification schedule of repayment multilateral

loans

Bullet and Custom Repayment Profiles

• Reduce debt service.
• Re-structuring of the maturity profile

Liability Management Operations

DEBT STRUCTURE: TYPE OF INTEREST

Interest rate risk has been reduced, with more than 88% of total NFPS debt contracted at a fixed rates.

Sources: Public Credit General Office Note: Preliminary figures, subject to rectification

74.1% 79.8% 79.8% 81.3% 86.5% 87.2% 88.6% 25.9% 20.2% 20.2% 18.7% 13.5% 12.8% 11.4% 2013 2014 2015 2016 2017 2018 Aug-19

Public Debt by Interest Type

Fixed Rate Variable Rate

DEBT STRUCTURE: CURRENCY TYPE

As a result of the implementation of the Debt Management Strategy, the proportion of debt in local currency has increased, thus contributing to the reduction of risk in international financial markets and unexpected movements in the exchange rate.

Sources: Public Credit General Office Note: Preliminary figures, subject to rectification

83.9% 83.2% 81.0% 77.5% 74.8% 74.8% 71.2% 16.1% 16.8% 19.0% 22.5% 25.2% 25.2% 28.8% 2013 2014 2015 2016 2017 2018 Aug-19

Public Debt by Currency

Foreign Currency Local Currency

DEBT STRUCTURE: MATURITY

Given the prioritization of medium-long-term financing, it has been possible to extend the average term in which the NFPS debt repays, which as April 30th, 2019 is around 9.6 years.

Sources: Public Credit General Office Note: Preliminary figures, subject to rectification

8.2 11.9 5.2 7.1 7.4 10.6 3.0 5.0 7.0 9.0 11.0 13.0 2013 2014 2015 2016 2017 2018 Aug-19

Average Time To Maturity (years)

External Debt Internal Debt NFPS Debt (Excl. Recap)

DEBT PROFILE

And to reduce of debt repayments at the short and medium term…

32% maturing in ≤ 5 years

Sources: Public Credit General Office Note: Preliminary figures, subject to rectification

31

Capital Markets

10

DOMESTIC AUCTION PROGRAM

2009

• Start

Auctions Program.

2010

• Start

Auctions Program.

• Maturities:

3, 5, 7 and 10 years.

2011

• Terms of

3, 7 and 10 years.

2012

• Terms of

7 and 10 years.

2013

• Terms of

5, 10 and 15 years..

2014

• Terms of

5, 10 and 15 years.

2015

• Terms of

7, 10 and 15 years.

2016

• Term of

7,10 and 15 years.

2017

• Term of 10

and 15 years and re-

• penings

2018

• Retap

23’s, 27’s, 32’s

• New 10

yrs

March 2009 Multi-price auctions. First Issuance at 7 and 10 Years First issuance at 15 years June 2015 Single Price Auctions. Lowest Rates Market Makers Program

2019: 5, 9, and 15 years RD$70,060.2 million

11

DOMESTIC CAPITAL MARKET

2.9 6.8 7.9 9.0 10.5 10.0 10.6 10.2 11.4 9.5 11.3 13.9% 14.0% 15.6% 15.9% 13.1% 10.5% 10.3% 10.9% 10.8% 10.0% 10.3%

Average Maturity and Yield

Madurez (años) Rendimiento

73,000 85,000 27,252 70,060

Domestic Bonds Issuances

(million DOP)

2.7% 4.4% 4.7% 4.9% 5.3% 7.2% 13.0% 19.6% 38.1%

Private Companies Insurance Companies Savings and Loan Associations Others Broker-dealer Individuals Non-residents Commercial Banks Pension Funds

Domestic Bonds Holders

17.6% 18.5% 15.6% 16.1% 20.6% 15.0% 13.0%

• 10,000.00

2013 2014 2015 2016 2017 2018 2019

Non Residents

Amount % Total

12

INTERNATIONAL ISSUANCES

2019: DOP issuance, 7 years @9.75%; 30 years USD bond at the lowest rate@6.492%

2010

• Total

Amount: US $ 750 mm.

2011

• Reopening
• f series to

10 years

• Total

Amount: US $ 750 mm.

2012

• Pre-

funded in 2011 (US $ 250 mm).

2013

• 10 Years

Bonds.

• Total

amount: US $ 1,500 mm.

2014

• Issuance and

reopening of 30-year bonds.

• Total Amount:

US $ 1,500 mm.

2015

• Issuance and

reopening of bonds to 10 and 30 years

• Total

Amount: US $ 3,500 mm.

2016

• 10 year

bond @ 6.875%

• Total

Amount: US $ 1,500 mm

2017

• 10 year

bonds @ 5.95% and @ 5.10%

• Total

Amount: US $ 1,700

2018

• DOP 40,000

mm - 5 year bonds

• US$1,000

mm – 30yrs

• US$1,300

mm – 10yrs

30 Years Issue @ 6.85%. First Issue at 30 años @7.45%. 10 Years Bonds @ 5.5% 10 Years Bonds @ 5.875% @ 6.60%.

• US$ 500.0 MM @ 6.95%
• Pre-financing: US$ 250.0

MM @ 6.875% First Issue in DOP, @ 8.9% 10 Years Bonds @ 7.5%.

FINANCING 2019

13

14

FINANCING 2019

Figures in million and as percentage of GDP

Sources: Public Credit General Office Note: Preliminary figures, subject to rectification

• Execution of 79.5% of the total financing for 2019.
• External Financing: 76%
• Domestic Financing: 82%
• Local currency financing: 47% of total

Proposed Modifed Budget

RD$ US$ %GDP RD$ US$ %GDP 231,880.0 4,443.85 5.0% 254,524.1 4,877.8 5.5% External Financing 159,061.7 3,048.3 3.5% 168,713.6 3,233.3 3.6% Multilaterals, Bilaterals, Commercial Banks (Investment Projects) 18,130.0 347.5 0.4% 14,480.0 277.5 0.3% Global Bonds 117,405.0 2,250.0 2.6% 130,450.0 2,500.0 2.8% Budget Support 23,526.7 450.9 0.5% 23,783.6 455.8 0.5% Bilaterals 521.8 10.0 0.0% 521.8 10.0 0.0% Multilaterals 23,004.9 440.9 0.5% 23,261.8 445.8 0.5% Domestic Financing 72,818.4 1,395.5 1.6% 85,810.5 1,644.5 1.8% Domestic Bonds 72,818.4 1,395.5 1.6% 85,810.5 1,644.5 1.8% BUDGET 2019 PROPOSED MODIFIED BUDGET 2019 FINANCING SOURCES

15

FINANCING EXECUTION 2019

Figures in million and as percentage of GDP

Sources: Public Credit General Office Note: Preliminary figures, subject to rectification

• Execution
• f

87.3%

• f

the total financing for 2019.

• External Financing: 86%
• Domestic Financing: 96%
• Local currency financing: 60% of total

Budget 2019 Proposed Modifed Budget

• Execution of 79.5% of the total financing

for 2019.

• External Financing: 76%
• Domestic Financing: 82%
• Local currency financing: 47% of total

FINANCING SOURCES PROPOSED MODIFIED BUDGET 2019 EXECUTION 2019 RD$ US$ %GDP RD$ US$ % GDP 254,524.1 4,877.8 5.5% 202,439.6 4,010.9 5.0% External Financing 168,713.6 3,233.3 3.6% 132,379.4 2,620.5 3.3% Multilaterals, Bilaterals, Commercial Banks (Investment Projects) 14,480.0 277.5 0.3% 5,318.5 104.7 0.1% Global Bonds 130,450.0 2,500.0 2.8% 126,262.8 2,500.0 3.1% Budget Support 23,783.6 455.8 0.5% 798.1 15.8 0.0% Bilaterals 521.8 10.0 0.0% 0.6 0.0 0.0% Multilaterals 23,261.8 445.8 0.5% 797.5 15.8 0.0% Domestic Financing 85,810.5 1,644.5 1.8% 70,060.2 1,390.4 1.7%

16

FINANCING 2020

Figures in million and as percentage of GDP

Sources: Public Credit General Office Note: Preliminary figures, subject to rectification

RD$ US$ % GDP GROSS FINANCING NEEDS 246,295.8 4,598.5 5.0%

• I. Overall Balance

(110,251.0) (2,058.5)

• 2.2%
• 1. Revenues

750,823.4 14,018.4 15.3%

• 2. Expenditures

861,074.4 16,076.8 17.5%

• II. Financial Applications

136,044.8 2,540.0 2.8% Debt Amortization 86,908.6 1,622.6 1.8% External Debt 56,479.5 1,054.5 1.1% Domestic Debt 30,429.1 568.1 0.6% Payable Accounts Reduction 46,311.2 864.660 0.9% Financial Assets 2,825.0 52.74 0.1% FINANCING SOURCES 246,295.8 4,598.5 5.0% External Financing 159,983.7 2,987.0 3.3% Multilaterals, Bilaterals, Commercial Banks (Investment Projects) 24,102.0 450.0 0.5% Global Bonds 107,120.0 2,000.0 2.2% Budget Support 28,761.7 537.0 0.6% Bilaterals 10,712.0 200.0 0.2% Multilaterals 18,049.7 337.0 0.4% Domestic Financing 86,312.1 1,611.5 1.8% BUDGET 2020

17

NFPS DEBT

83.9% 83.0% 81.0% 77.5% 74.8% 74.8% 69.9% 65.7% 2013 2014 2015 2016 2017 2018 2019 e 2020 e

Foreign Currency Debt

37.0% 35.4% 33.9% 35.3% 36.9% 37.6% 40.9% 42.9% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 2013 2014 2015 2016 2017 2018 2019 e 2020 e

Debt Stock (% GDP)

Public Debt Composition

Public Debt Office Ministry of Finance

October 2019