- The CADES
- Financial Information
- News and publications
CADES info N°25 (june 2009)
|
Patrice Ract Madoux |
2008 full year results were approved at the end of April by the Board of Directors. In 2008, CADES earnings reached €5.98 billion: - €2.9 billion were appointed to amortizing the debt in accordance with the amortization objective fixed by law for 2008; - €3.1 billion to paying interests, a similar amount to previous year. Its capacity to quickly adapt and react to market conditions, and the strong relationship it has build progressively with investor throughout the world helped CADES to successfully issue in 2008 bonds for €8.6 billion under various financial instruments and investment terms. CADES has therefore been able to adapt it issuing strategy to market environment heavy changes which occurred during the year. For the first time, the US dollar market represented the first financing source before Eurobonds. Three issues were hence launched before the summer (two 3-year and one 5-year maturity). A new benchmark bond with a 5-year maturity was launched at the end of August, just before financial crisis deepened, allowing CADES to benefit from historical low financial conditions (Euribor 3-month -14 bps). Furthermore, short-term issuing programmes were very active, mainly issued in US dollar. Risk aversion led investors, especially central banks, to shorten their investment term and to shift towards zero-risk instruments like CADES’s. The liquidity of these markets allowed CADES to paypack its bonds and to carry out part of the debt transfer under extremely favorable financing conditions. The beginning of the year 2009 confirmed CADES in its position of first-ranked international issuer. The €26.9 bn newly assumed debt increased its financing programme to €33.1bn. Despite difficult market conditions, our programme is running well with €13.9 bn already issued. Operations successfully met investors’ requirements who consider CADES as a source of assurance and stability in today’s uncertain world’s capital markets.
|
Key figures as of 31/12.
Highlights from 2008 included aggravation of the financial crisis and its spread over the economy. Changes in interest rates during the year mirror the 2 main phases which highlighted 2008.
Rates climb and the curve flattens while prices are going up and economy is slowing down (stagflation scenario).
The general expectation is that the crisis will be limited sectorally and georgraphically. Crisis appears to give rise to a seious but manageable slowdown in the US and potentially in Europe. However, emerging counties, characterized by solid growth, appear ta be able to support the world economy.
Those expectations translate into stron raw material price increases until July when the oil price reaches $147.3 per barrel. Inflationthen becomes the major concern and rates peak before the summer.
After summer, the raw material bubble bursting and the dollar climbing result in recession for several countries. This marks the end of the decouplig theory. Lehman Brother's bankruptcy contributes to this perception and the crisis transfers from financial markets to the real economy. After world growth long supported by credit expansion, the collapse of the banking system leads to expectations of deep and lasting recession.
Conjoncture indicators take off and inflation forecasts collapse turning instead to prospects of deflation. To face this deflation risk scenario, central banks cut interest rates dramatically. From this point, all rates go down in a substantial steepening of the curve.
CADES refinancing rate decreases by 100bps from 4.13% on October 31, 2008 to 3.13% on May 31, 2009 .
This decrease combines two elements :
- In crease of variable and revisable rate indebtedness
To refinance ACOSS newly assumed debt (€10 bn on
- A strong decrease of the refinancing cost of the variable and revisable compartment
Decrease in six months of 300 bps of the ECB interest rate allows CADES to enhance its refinancing cost on the variable and revisable part (from 4.87% to 1.14%).
Rate decreases are historical in pace and in magnitude, and allow CADES to bring down its refinancing rate to an almost historical low since its inception (3.13%).
Due to the future elongation of the average length of the borrowing (given the funding programme), the refinancing rate is called to pick up in the following months.
Contacts
|
Information about CADES Geneviève GAUTHEY genevieve.gauthey@cades.fr Magali CLAVIER magali.clavier@cades.fr Bloomberg CADES <GO> |