Debt and Liquidity Management Agency Public report of the activities for the year 2006 29 th May 2007

Debt and Liquidity Debt and Liquidity Management AgencyManagement Agency

Public Public reportreport of the activities for of the activities for the year 2006the year 2006

29th May 2007

Public presentation of the ARDAL´s activities for the year 200Public presentation of the ARDAL´s activities for the year 20066

22

ARDAL´s ARDAL´s DDetailsetails

Address: Radlinského 32, 813 19 BratislavaTelephone: +421 2 57262503Fax: +421 2 52450381Internet: www.ardal.sk

[email protected]. Dep.: Ministry of Finance of the Slovak RepublicLegal identity: Budgetary organizationReuters Code: DLMA


33

Debt and Liquidity Debt and Liquidity Management Agency Management Agency

(ARDAL)(ARDAL) Was established under the Act No. Was established under the Act No.

291/2002 Coll. on State Treasury 291/2002 Coll. on State Treasury

The Agency is securities trader under The Agency is securities trader under

the Act No. 566/2001 Coll. on the Act No. 566/2001 Coll. on

Securities and Investment Services Securities and Investment Services


44

Scope of ARDAL´S Scope of ARDAL´S AActivities ctivities

To manage Central Government Debt and To manage Central Government Debt and

Risks in accordance with valid Debt Risks in accordance with valid Debt

Management StrategyManagement Strategy

To perform the settlement of securities tradesTo perform the settlement of securities trades

To manage State’s daily liquidity To manage State’s daily liquidity

To perform financial operations on the To perform financial operations on the

financial marketfinancial market


55

Organization Budget Organization Budget for the for the YYear 2006ear 2006

Binding limitsBinding limits

(in ths. SKK)(in ths. SKK)

Approved Approved budget for budget for

20062006

Adjusted Adjusted budget as budget as

of of 31.12.200631.12.2006

Actual Actual state state as of as of 31.12.200631.12.2006

Revenues Revenues 00 00 00

Total Total expendituresexpenditures 26 04926 049 35 69735 697 35 66335 663

Current Current expendituresexpenditures 25 79925 799 29 19029 190 29 18929 189

Capital Capital expendituresexpenditures 250250 6 5076 507 6 4746 474


66

Current Current EExpendituresxpenditures

Wages, salaries, service emoluments and Wages, salaries, service emoluments and

other personal perquisites other personal perquisites (38,1%)(38,1%)

Insurance feesInsurance fees and and employers´ contributions employers´ contributions

to insurance companies and to the National to insurance companies and to the National

Labour Office Labour Office (10,1%)(10,1%)

Goods and other services Goods and other services (51,8%)(51,8%)

– of that: IT operationof that: IT operation (78,6%) (78,6%)


77

Capital Capital EExpendituresxpenditures

Software – increase of internal security of Software – increase of internal security of

ARDAL´s network ARDAL´s network (2,2%)(2,2%)

Hardware – completion of IT and security Hardware – completion of IT and security

enhancement enhancement (29,8%)(29,8%)

Accounting module implementation Accounting module implementation (68,0%)(68,0%)


88

Main Main AActivities of ctivities of ARDAL in 2006ARDAL in 2006

Organize electronic primary-sales state Organize electronic primary-sales state securities auctionssecurities auctions

Debt management in accordance with Debt management in accordance with approved Debt management strategyapproved Debt management strategy

Risk management of the State debtRisk management of the State debt Provides smooth state refinancingProvides smooth state refinancing Active management of the state liquidityActive management of the state liquidity Provides special consulting to the Ministry and Provides special consulting to the Ministry and

other state organizationsother state organizations


99

Slovak Government Debt Slovak Government Debt StructureStructure

As of 31.12.2006As of 31.12.2006 (in ths(in ths.. SKK)SKK)

Treasury BondsTreasury Bonds 436 398 373436 398 373

issued in SKKissued in SKK 349 965 873349 965 873

iissued in foreign ssued in foreign currencycurrency 86 432 50086 432 500

Treasury BillsTreasury Bills 00

Government loansGovernment loans 25 350 87325 350 873

Refinancing system with Refinancing system with STST 151 882 029151 882 029

Money-market loansMoney-market loans 00

Other liabilitiesOther liabilities 2 072 0202 072 020

Risk from govern. Risk from govern.

guaranteesguarantees 19 921 70019 921 700

Total liabilitiesTotal liabilities 635 624 995635 624 995


1010

State State BBudget udget BBalance alance DDevelopment for the evelopment for the

YYears 2003 - 2006ears 2003 - 2006

-70 000

-60 000-50 000

-40 000-30 000

-20 000-10 000

010 000

20 000

01 02 03 04 05 06 07 08 09 10 11 12month

mil. SKK

Balance 2005 Balance 2006

Balance 2003 Balance 2004


1111

Treasury Bills 2006Treasury Bills 2006

Issue of Treasury Bills to own portfolioIssue of Treasury Bills to own portfolio

Issue DIssue Date ate MaturityMaturity DateDate

Face Face VValuealue

31.5.200631.5.2006 30.5.200730.5.2007 32 bln. Sk32 bln. Sk

16.8.200616.8.2006 15.8.200715.8.2007 30 bln. Sk30 bln. Sk

Refinancing costs from State Treasury funds – 3,2% p.a.


1212

TB TB IIssues 1993-2006ssues 1993-2006

15,59%

24,95%

0,00%*

11,31%10,01%

7,02%

17,60%

3,14%4,34%

5,54%

7,46%7,73%7,35%

14,13%

0

50 000

100 000

150 000

200 000

250 000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

mil. SKK

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

Total bids Accepted bids Average interest rate

* In 2006 no auction of State Treasury Bills was realized


1313

Domestic Treasury Domestic Treasury Bonds Bonds AAuctions uctions RResults in 2006esults in 2006

7R-ZERO

5R-float

15R-fix

10R-fix

7R-ZERO15R-fix

10R-fix

20R-fix

7R-ZERO15R-fix

10R-fix

20R-fix

7R-ZERO15R-fix

10R-fix

20R-fix7R-ZERO

15R-fix20R-fix

4,26%

3,55%

4,28%4,46%

4,39%

5,17%

3,22%

4,01%

5,03%4,58% 4,79%

0

5 000

10 000

15 000

20 000

mil. SKK

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%


In 2006 was accomplished 19 auctions of Treasury Bonds in accordance with auction calendar.


1414

Results of Treasury Results of Treasury Bonds Bonds AAuctions uctions

AAccording to ccording to YYearsears

4,06%

20,75%17,00%

14,65%13,21%

10,21%8,64%

9,49%7,87% 7,40%

5,09% 4,82%2,95%

23,89%

0

50 000

100 000

150 000

200 000

250 000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

mil. SKK

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%



1515

EUROBOND 2006EUROBOND 2006

Issued according to Strategy Issued according to Strategy Maturity 15 yearsMaturity 15 years Fixed coupon 4,00% p.a.Fixed coupon 4,00% p.a. Face value 1 blFace value 1 blnn. EUR. EUR Lowest marginLowest margin to mid ASW to mid ASW -- 0,07%0,07%


1616

Treasury Bonds Treasury Bonds PPortfolioortfolio

Average interest rate of the domestic Treasury Average interest rate of the domestic Treasury Bonds issued in 2006 – Bonds issued in 2006 – 4,06% p.a.4,06% p.a.

Average interest rate of outstanding portfolio as Average interest rate of outstanding portfolio as of 31.12.2006of 31.12.2006

Treasury Bonds denominated in SKK – Treasury Bonds denominated in SKK – 4,59% 4,59% p.a.p.a.

Treasury Bonds denominated in EUR – Treasury Bonds denominated in EUR – 4,94% 4,94% p.a.p.a.

Total – Total – 4,84% p.a. 4,84% p.a. – compare to 2003 – compare to 2003 – 6,29% p.a.6,29% p.a.


1717

Average Average MMaturity of aturity of Treasury Bonds Treasury Bonds

PPortfolioortfolioMaturity (in years)

0,001,002,003,004,005,006,00

Maturity 3,2900 3,824 4,654 4,554 5,139

2002 2003 2004 2005 2006


1818

Duration of Treasury Duration of Treasury Bonds Bonds PPortfolioortfolio

Duration (in years)

0,00

1,00

2,00

3,00

4,00

Duration 2,800 2,433 3,553 3,161 3,729

2002 2003 2004 2005 2006


1919

SummarySummary 1 774 financial operations 1 774 financial operations Trading with 19 domestic and foreign banksTrading with 19 domestic and foreign banks 19 Treasury Bonds auctions at domestic market19 Treasury Bonds auctions at domestic market Historically the most successful issuance of Historically the most successful issuance of Slovak Slovak

EurobEurobondond 1 1 013 coupon and principal 013 coupon and principal paymentspayments to owners to owners Achievement of targets defined in Debt Achievement of targets defined in Debt

Management Strategy up to 2006Management Strategy up to 2006 The sThe second historically lowest costs of new state econd historically lowest costs of new state

debtdebt Historically Historically the the lowest costs for state debt coveringlowest costs for state debt covering


2020

Near Near FFuture uture GGoalsoals

Preparation Preparation to EMUto EMU accession accession Improvement of securities settlementImprovement of securities settlement Introduction of primary dealers Introduction of primary dealers

systemsystem Pursue New Debt Management Pursue New Debt Management

Strategy TargetsStrategy Targets ISDAISDA


2121

Documents

Debt and Liquidity Management Agency Public report of the activities for the year 2006 29 th May 2007