Kein Folientitel

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Reinhard PlatzerCEO Dexia Kommunalkredit Bank

Infrastructure Financing in CEEC Challenges from
the point of view of a Specialist Bank for the
Public Sector
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The general environment summarise

• High growth rates (average 2002-2004 Romania 6,
  Bulgaria 5)
• Sound budgets (2004 Romania 1.4, Bulgaria
  1.3)
• Low debt ratios (2004 Romania 18.5, Bulgaria
  38.8)
• Stable political and legal situations
• Bulgaria 4 notches, Romania 5 notches, both Ba1

• Up to now main investments were mainly financed
  by the central state
• Local governments become new market participants,
  access to short maturities
• Dexia Kommunalkredit Bank offers solutions with
  top down approach

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The Market
Domicile of Dexia Kommunalkredit Bank
Countries in which Dexia-Kom has a subsidiary
Countries serviced by Dexia-Kom from Austria
15 countries with 136 mln. inhabitants
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The Company Structure
Dexia Crédit Local, Paris (F)
Kommunalkredit Austria AG, Vienna (A)
49.16
50.84
Dexia Kommunalkredit Bank AG, Vienna (A)
78.98
100
100
100
100
Dexia banka Slovensko a.s., Zilina (SK)
Dexia Kommunalkredit Bank Polska S.A., Warsaw
(PL)
Dexia Kommunalkredit Bulgaria EOOD Sofia (BG)
Dexia Kommunalkredit Romania S.R.L. (RO)
Hungary (2nd term2005)
Dexia Kommunalkredit Czech Republica.s.,
Prague (CZ)
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CEECs the Market with theHighest Growth Rates
in Europe

Average growth p. a. over 2002-04
Average growth p. a. EU-15 1,3
Forecast 2005
Higher growth rates lead to increasing incomes
Source IFO, Eurostat, OECD, IMF, National
Statistical Offices, 2003 and 2004, EU Commission
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Tight Budgets
Public funds are not able to meet investment
requirements
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Sound budgets in Bulgaria and Romania


Source Eurostat
Bulgaria
Romania
Significant improvements in public balances and
debts
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Improving Creditworthiness of Local Authorities
in CEEMoody's sovereign ratings long term,
foreign currency(before November 12,
2002/current)
Baa1/A1
Baa2/A2
Ba1/A3
Baa1/A2
Baa1/A1
Baa3/A2
Aaa/Aaa
Baa1/A1
A3/Aa3
B3/Ba1
Baa3/Baa3
B2/Ba1
Last Upgrade Romania
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CEECs High Investment requirements
New Member States (NMS) excl. CY, MT, incl. BG
and ROM
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FinancingThe business fields of Dexia-Kom
Infrastructure
Health
Public Finance CEE
Education, Culture
Social housing
Public construction
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Top down/one stop shop strategy Arranging of and
investments in government bonds or loans
Example Issue of a sovereign-bond with the
record maturity of 50 years for the Republic of
Poland

• Dexia Kommunalkredit Bank was lead manager of a
  EUR 500 million bond issue of the Republic of
  Poland
• First bond issue of a CEE-state with the maturity
  of 50 years
• EUR 300 Mio. have been taken over by Dexia
  Kommunalkredit Bank (EUR 250 mln.) and
  Kommunalkredit (EUR 50 mln.)

Republic of Poland optimises its financing
portfolio and secures itself the current low
interest rate for a long lasting period
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Top down/one stop shop strategy Debt
restructuring through the purchase ofliabilities
and claims
Example City of Gdansk

• Initial situation
• Gdansk had matured liabilities to private
  property management companies due to delayed
  payments ? Interest up to 13

Solution 1. Gdansk and management companies
agreed on restructuring liabilities 2. Kommunalkre
dit bought restructured liabilities from
management companies

• Advantage
• Interest payments were reduced from 13 to 5.9
• Debts were reduced through the restructuring of
  liabilities
• Debts can be repaid over a period of seven years
• Reduction of the budget deficit

Transactions of this kind are also possible with
water or energy companiesCurrently discussed for
the financing of energy projects in Bulgaria
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Top down/one stop shop strategy Offering
Alternatives the Austrian Maastricht Project
Initial situation No market producer in the
water management sector
By mandate of the Austrian Ministry of Finance,
Kommunalkredit implemented the ESA 95 rules in
the water management sector
European System of National Accounts 95

• A public producer can be classified as a market
  producer if
• it has decision-making autonomy in respect of its
  principal function
• it either keeps a complete set of accounts or
  would be able to compile a complete set of
  accounts if they were required
• more than 50 of production costs are covered by
  sales

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Top down/one stop shop strategy Offering
Alternatives Implementation of the Austrian
Maastricht Project in the water management sector
in 1996

• A public producer can be classified as a market
  producer if
• it has decision-making autonomy in respect of its
  principal function
• it either keeps a complete set of accounts or
  would be able to compile a complete set of
  accounts if they were required
• more than 50 of production costs are covered by
  sales

• Long-term effects
• Concept of Market Producer was implemented in
  other public services water management
  sector, health care, waste management etc.
• Annual decrease in Maastricht deficit EUR 600
  mln. or 0.2 of GDP
• Reduction of Maastricht debt approx. EUR 4.7
  bln. or 1.9 of GDP in 2003
• Higher efficiency through better data basis ?
  benchmarking

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Top down/one stop shop strategy Offering
Alternatives Sale of loans

• Public Sector granting Loans to the Public Sector
• Left pocket to the right pocket strategy
• Since 1996 these loans have been sold by public
  tender

Environmental and Water Management Fund
Nominal value EUR 5,217 mln.
Proceeds EUR 3,472 mln.
Kommunalkredit EUR 1,107 mln.
Housing Loans in Austria
Nominal value EUR 5,735 mln.
Proceeds EUR 3,188 mln.
Kommunalkredit EUR 2,361 mln.
Annual reduction of Maastricht deficit approx.
EUR 200 mln.
Reduction of Maastricht debt by 3 of GDP
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Top down/one stop shop strategy Offering
Alternatives the effects of the Sale of loans
and the Maastricht project
On public debt
Maastricht Project 2 of GDP Sale of
Loans 3 of GDP Total 5 of
GDP
On annual public deficit
Maastricht Project 0.2 of GDP Sale of
Loans 0.1 of GDP Total 0.3
of GDP
Large volumes of public loans are available in
CEECs
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Top down/one stop shop strategy Structured
Finance a chance for new loans debt
rescheduling
Chance for new loans

• Making use of favourable differences between
  interest indicators
• Market-driven restructuring is possible at any
  time

Low interest rates lt 2.0 possible
Chance for debt rescheduling

• A beneficial possibility to restructure existing
  loans
• No cancellation of the contract with the house
  bank necessary
• No obligation for a tender procedure

Contribution to the reduction of the
Maastricht-deficit
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Strong business growth

• EUR 1 bln. as of 1st March 2005
• EUR 3.7 bln. as of 31st July 2005
• EUR 2.7 bln in 2005 new Businessthereof
  Bulgaria EUR 36 mln.thereof Romania EUR 64 mln.

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Selected Transactions
1
VEOLIA Environment Term loan (Senior Lead
Manager)
City of Budapest Syn. term loan (Lead Arranger)
Autocesta Zagreb-Macelj Syn. project finance
(Lead Arranger)
City of Bratislava Term loan facility (Lender)
Congress Centre Prague Syndicated term loan
(Lender)
City of Gdansk Restructuring (Lender)
Republic of Poland (debt rescheduling) EUR 1000
mln.Thereof EUR 250 mln. new 50yr-bond!
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Selected Transactions
2
City of Warsaw Infrastructure loan (Investor)
Warsaw Airport II Guarantee for EIB-loan
(Guarantor)
Zagrebacki Elektricni Tramvaj Term loan
facility (Arranger)
Hrvatska banka Term loan facility (Manager)
Zagrebacka banka Syndicated term loan (Manager)
Dopravní Podnik Hl. M. Prahy Long-term
syndicated facility (Investor)
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Selected Transactions
3
City of Prague EURO MTN Programme (Dealer)
Prague Airport Terminal Syndicated guarantee
(Arranger)
City of Krakow Guarantee for EIB-loan (Guarantor)
Republic of Hungary Term loan facility
(Participant)
ECK Generating Project financing (Co Arranger)
AB Lietuvos Energija Syndicated term loan
(Manager)
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