1 / 32

The Credibility of the City of Moscow

The Credibility of the City of Moscow. Sergey Pakhomov Chairman City of Moscow State Debt Committee. Section 1. Moscow Economy and Finance. Moscow Economic Highlights. Moscow is one of Russia’s 89 Subjects

yaron
Download Presentation

The Credibility of the City of Moscow

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Credibility of the City of Moscow Sergey Pakhomov ChairmanCity of Moscow State Debt Committee

  2. Section 1 • Moscow Economy and Finance

  3. Moscow Economic Highlights • Moscow is one of Russia’s 89 Subjects • Modern city with 10.4 million of residents accounting for 7% of Russia’s total population, generates 20% Russia’s GDP • 44% of financial institutions and 83% of banks are concentrated in Moscow • Accounts for 38% of Russia’s total foreign direct investments • Unemployment at 1.6%more than five times lower the national average of 9% GDP / GCP Budget revenue Other Subjects of Russian Federation Other Subjects of Russian Federation 80% 65% Moscow 35% Moscow 20%

  4. 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 2000 2001 2002 2003 E 2004 E 2000 2001 2002 2003 E 2004 E Moscow Russia Moscow Russia Moscow and Russia key macroeconomic indicators GDP, GCP growth rates Industrial growth » High growth rate

  5. 100% 90% 80% Net taxes on products 70% 60% Manufacturing 50% 40% 30% Services 20% 10% 0% 1994 1997 2000 2003 Moscow GCP Dynamics » Service oriented economy » Service sector growth

  6. Composition of budget revenues As at January 1, 2002 Retail trade Industry and catering 17,2% 16,3% Finance Agriculture 6,4% 0,1% Construction 5,9% Communications 4,5% Materials/supplies 3,0% Transport 31,6% Housing and Other utilities sectors 1,8% 13,3% » budget revenues are divercified

  7. bln. RUR. bln. US$ 400 15 300 Budget 10 revenue (rbl.) 200 Budget revenue 5 (US$) 100 0 0 1997 1998 1999 2000 2001 2002 2003 2004 P Dynamics of budget revenues » stable budget revenues

  8. Section 2 • City of Moscow indebtedness

  9. City of Moscow Economy and Indebtedness • GCP of US$86 billion (2003 E) – 20% Russia GDP • Budget revenue of US$12.9 billion (2004 P) • Total current debt at US$ 2,7 billion (April 2004) accounts for 21.1% of budget revenue and 2.5% of GCP • Current credit rating: S&P – BВ+(upgraded 02.02.04); Moody’s – Bа1(upgraded 14.01.04); Fitch – BВ+ (upgraded 23.10.03)

  10. RUB, bln. 400 Budget revenue 300 Budget expenditure 200 Budget capital expenditure 100 Budget deficit 0 2000 2001 2002 2003 2004 P City budget capital expenditure » capital expenditure is partly financed by borrowings

  11. 100% 90% 80% Domestic bonds 70% 60% Domestic bank 50% loans 40% Eurobonds 30% 20% Foreign bank loans 10% 0% 1997 1998 1999 2000 2001 2002 2003 2004 P 2005 E City of Moscow Debt Structure * *Debt managed by City of Moscow State Debt Committee

  12. Section 3 • Development of Moscow Domestic Bond Market

  13. Moscow region 13,3% Saint- Petersburg 10,7% Khanty- Mansi Moscow Autonomous Region 50% 4,3% Yamal- Nenets Autonomous Yakutia Region Other 3,5% 4,0% 14,2% Moscow Bonds and Russian Capital Market • Moscow – the largest Russian regional bond issuer (present market share – RUB 47 blnor 50% of all registered issues of Sub-Federal bonds) Regional Market Share

  14. Domestic Bond Market Development • Total volume of bonds in circulation – RUB 47 bln • Number of underwriters and market-makers – 25 institutions • Yield spreads of the most liquid issues – 1-2,5% over Federal bonds • Domestic debt daily average turnover on MICEX (since 2004) – RUB 886 mln

  15. 50 40 30 RUB. bln. 20 10 0 06/01 09/01 12/01 03/02 06/02 09/02 12/02 03/03 06/03 09/03 12/03 03/04 06/04 Dynamics of Moscow Domestic Bonds Circulation

  16. 18 30% 16 Bonds for placement 25% Bids 14 Yeld 12 20% 10 RUB bln. 15% 8 6 10% 4 5% 2 0 0% RU26038MOS RU25034MOS RU25032MOS RU25020MOS RU25021MOS RU25022MOS RU25023MOS RU25024MOS RU25025MOS RU25027MOS RU25026MOS RU25028MOS RU25029MOS RU25030MOS RU25033MOS RU25031MOS Moscow Domestic Bonds Auctions in 2002 – 2004

  17. 6 000 5 000 OTC market MICEX cleared 4 000 Monthly turnover, RUB, mln 3 000 2 000 1 000 0 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Moscow Domestic Bonds: Turnover Dynamics on MICEX

  18. Moscow Domestic Bonds: Yield Performance in 2002 – 2004 20% 15% RU24016MOS RU25022MOS RU25024MOS 10% RU25025MOS RU25027MOS RU25038MOS 5% Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04

  19. Moscow Domestic Bonds: Yield to Maturity 12% Moscow Russia 10% 8% 6% 4% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

  20. Development of Moscow Domestic Bond Market in 2003 • Volume of bonds in circulation has increased by 2.6times • Auction sales has grown by more than 2.8times • Number of Authorized Underwriters and Market-makers for Moscow domestic bonds has grown by 1.4times • Demand for Moscow domestic bonds at auctions has grown by 3 times • Stock exchange bond turnover has increased, liquidity of bonds has remained high

  21. Section4 • City of Moscow Debt Management Strategy

  22. Debt Management Strategy • Timely and full debt service and repayment • Keeping debt size within safe limits to avoid difficulties with its service and redemption • Diversification of debt instruments and markets • Maximum transparency of Moscow budget and debt obligations • Efficient debt management. Goal: debt optimization, reduction of debt service expenditure • Long-term planning of debt profile and on-line debt control

  23. Moscow Government Debt Management Guidelines • The Government approved guidelines address the following issues: • budget planning policy in relation to: • long term planning of debt size, structure and profile • setting safe debt limits • procedure for debt origination and debt management operations • rules for debt accounting • functioning of debt payment system

  24. Debt Safety Ratio For The City of Moscow • Annual current and future debt repayments should not exceed the “capital resource” of the City budgets for corresponding years • “Capital resource” is operational surplus of the City budget: City’s current revenue always exceeds current expenditure

  25. Goals of Moscow Debt Management Strategy • Obtaining necessary funds for development while maintaining debt size at a safe level • Increased transparency of debt and predictability of City’s debt management • Growing share of domestic bonds in debt structure • Predominance of bonds as debt instruments • Bond market development, increased market liquidity and domestic debt duration • Diversification of debt instruments • Active debt management and even distribution of debt service and debt repayment through future years to prevent excessive strain on the City's budget

  26. Section5 • Conclusion

  27. Attractiveness of Moscow Bonds to Investors • Moscow has growing and diversified economy • Low debt fully controlled by the City Government • High credit rating constrained by the Sovereign ceiling • Advanced debt management system providing day-to-day debt control • Unstained credit history: since 1997 Moscow State Debt Committee has made due payments of interest and principal for the total of over RUB 145 bln • Highly liquid and fast growing domestic bond market

  28. Borrowing Targets for 2004 • RUB 28.9 bln – Domestic bonds • RUB 9.5 bln – Domestic loans • Euro 375 mln – Foreign debt

  29. Goals of City of Moscow Debt Management for 2005 – 2006 • Substantial increase in domestic debt (up to 70% of total debt RUB 100 bln) • Increasing issue size on domestic market up to RUB 10 bln • Increasing the maturity of new rouble bonds for up to 10 years • Refinancing the Euro 400 Eurobond in 2006 • Issuance of amortizing bonds on domestic market

  30. Loans Loans from the from the RF RF Domestic Domestic loans loans Domestic bonds Foreigh Domestic loans Foreigh bonds loans Borrowing Programme 2004 2005 (draft) • Total: • Raised– RUB36.9bln. • Repaid – RUB20.0bln. • Total: • Raised – RUB 54.9bln. • Repaid – RUB28.8bln.

  31. Debt Obligations of the City of Moscowin the Internet • Information on debt obligations of the City of Moscow can be found on the WEB: • http://www.MoscowDebt.ru/

  32. The Credibility of the City of Moscow Sergey Pakhomov ChairmanCity of Moscow State Debt Committee

More Related