THE KEY ELEMENTS OF AN ISSUANCE CALENDAR AND ITS IMPLEMENTATION :

DISCLOSURE WITH HOW MUCH FLEXIBILITY ?

OECD / World Bank meeting Washington – June 2003

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SUMMARYSUMMARY

I. TRANSPARENCY : A QUESTION OF EQUILIBRIUM

II. TRANSPARENCY IN THE PRIMARY MARKET

III. THE BELGIAN CASE : ISSUANCE CALENDARS AND THEIR IMPLEMENTATION

IV. INTERNATIONAL COMPARISON : SOME EMU COUNTRIES

V. CONCLUSION

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I. TRANSPARENCY : A QUESTION OF EQUILIBRIUM I. TRANSPARENCY : A QUESTION OF EQUILIBRIUM A. Why being transparent ?

1. to increase predictability & hence to reduce the risk for investors / intermediaries. Additional ways to achieve the same goal :

- to reduce the time between introduction of bids and announcement of results - regularity in tapping the market

2. Public accountability 3. Marketing : separate asset class

B. Why not being totally transparent ? 1. to avoid the risks of the market positioning itself against the issuer The issuer needs flexibility :

- the volumes to be issued - the timing / frequency

2. to reduce the reputation risk incurred through an uncovered auction

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II. TRANSPARENCY IN THE PRIMARY MARKET II. TRANSPARENCY IN THE PRIMARY MARKET

A. Different forms of transparency of the issuer : Publication of : 1. Financing needs & financing plan 2. Issuance calendar 3. Data before the auction e.g. lines, the volumes to be issued – options :

- exact amount - approximation

4. Data after the auction : - immediately after the issue - later on e.g. annual report

B. Legal framework : Transparency depends not only on the financial situation of the country but also on the legal framework.

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III. THE BELGIAN CASE : III. THE BELGIAN CASE : ISSUANCE CALENDARS & THEIR IMPLEMENTATION (1) ISSUANCE CALENDARS & THEIR IMPLEMENTATION (1)

1. Before the introduction of the euro :

Before 1999, obligation for certain investors to invest in products of the Belgian State

Need for transparency considered to be limited

Establishment of the calendar by ministerial decree

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III. THE BELGIAN CASE : III. THE BELGIAN CASE : ISSUANCE CALENDARS & THEIR IMPLEMENTATION (2) ISSUANCE CALENDARS & THEIR IMPLEMENTATION (2)

2. After the introduction of the euro :

BEFORE THE AUCTION

Financing requirements : budgeted amounts + breakdown

Calendar :

Evolution

With the introduction of the euro, gradual reduction of bond (OLO = linear bond) and bill (Treasury certificates) lines in order to enhance liquidity and target issuance range in order to increase transparency

Standardizing of the amount of the weekly bill auctions by smoothing out the fluctuations in the cash position of the Treasury

As from 2000, organisation of OLO tenders on a bi-monthly basis (except when syndication)

As from 2001, new calendar for bills :- maturity frequency : 1 maturity / month : all lines are fungible - issuance frequency : weekly with 2 lines instead of 3 : either 3 and 12 month lines, or 3 and 6 month lines

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III. THE BELGIAN CASE : III. THE BELGIAN CASE : ISSUANCE CALENDARS & THEIR IMPLEMENTATION (3) ISSUANCE CALENDARS & THEIR IMPLEMENTATION (3)

Flexibility

Schedule is purely indicative – can be changed at any time

Some changes have taken place :

- opening of new benchmark lines through syndication – 1st auction after

syndication cancelled

- syndication with linear bonds reduction in the sums tendered on TCs at certain times (example in December 1999)

- in 2002, issuance of new FRN in order to refinance the reverse auction of one of the remaining classical bonds

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III. THE BELGIAN CASE : III. THE BELGIAN CASE : ISSUANCE CALENDARS & THEIR IMPLEMENTATION (4) ISSUANCE CALENDARS & THEIR IMPLEMENTATION (4)

Timing & Publication

Calendar established and published on yearly basis, generally in November

Before 2001, the calendar was published in the Official Journal with message to

Dow Jones, Telerate and clearing institutions

As from 2001, both calendars for bonds and bills are published on our website and no

longer in the Official Journal

Content

Calendar gives following information :

a. Bonds : date of auction (Monday) & value date for settlement and delivery

b. Bills : date of auction (Tuesday) & value date for settlement and delivery

& maturity date of TCs to be issued & ISIN code

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III. THE BELGIAN CASE : III. THE BELGIAN CASE : ISSUANCE CALENDARS & THEIR IMPLEMENTATION (5) ISSUANCE CALENDARS & THEIR IMPLEMENTATION (5)

Invitation to bid :

BONDS : on the Monday preceding the auction after 5 PM on Bloomberg, Reuters

and Telerate :

date of auction & value date for settlement & delivery

specifications of the OLOs to be issued (discussed with Primary Dealers)

ISIN code

BILLS : on the Friday preceding the auction at 4 PM on Bloomberg, Reuters and Telerate :

date of auction & value date for settlement & delivery

maturity date of the TCs to be issued + ISIN code

amount of TCs maturing on the value date of the auction

current outstanding of the lines of TCs which will be issued

range of global nominal amount to be auctioned, all lines together

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III. THE BELGIAN CASE : III. THE BELGIAN CASE : ISSUANCE CALENDARS & THEIR IMPLEMENTATION (6) ISSUANCE CALENDARS & THEIR IMPLEMENTATION (6)

Announcement of a target issuance range before each OLO & TC auction (last Target day of the week preceding) the announced range applies to the total amount auctioned on a competitive basis normally, amount issued within the announced range. The Treasury reserves the right to limit the amount of the accepted competitive bids to 80 % of the amounts offered. range - for bills = 200 to 300 millions of €

- for bonds = 400 to 500 millions of €

AT THE AUCTION On the day of the auction until 10 AM, the Treasury may cancel an auction if an exceptional and unforeseen event occurs.

In case of exceptional circumstances, bids can be submitted at the recovery center located at the National Bank of Belgium. All necessary information regarding timing and auction procedure will be timely communicated.

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III. THE BELGIAN CASE : III. THE BELGIAN CASE : ISSUANCE CALENDARS & THEIR IMPLEMENTATION (7) ISSUANCE CALENDARS & THEIR IMPLEMENTATION (7)

AFTER THE AUCTION

Announcement of the results (1)

The results are published a few minutes after cut-off time of the bidding process :

first, via the electronic auction system Bloomberg : global results and individual results

of each bidder;

thereafter, via the pages of the Debt Agency on Bloomberg, Reuters, Telerate

+ press (fax), clearing institutions (e-mail) and website.

Following information is published :

the total amount of valid bids the proposed minimum & maximum prices or rates

the stop price / the limit rate the total amount allocated the number of successful bidders

the reduction percentage at stop price / at the limit rate the weighted average price /

interest rate of the auction the weighted average yield of the auction for bonds

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III. THE BELGIAN CASE : III. THE BELGIAN CASE : ISSUANCE CALENDARS & THEIR IMPLEMENTATION (8) ISSUANCE CALENDARS & THEIR IMPLEMENTATION (8)

Announcement of the results (2)

If the results are not released before 0:30 PM, the Treasury will inform the PD & RDs on the reasons through Bloomberg or e-mail, and if needed Reuters & Telerate

If the results are not released before 2 PM, the PDs & RDs are assumed to have cancelled their bids unless fax before 2 PM

In case of severe problems, the Treasury may resort to an alternative auction procedure. In that case, instructions on Bloomberg and e-mail, and if needed Reuters & Telerate.

Possible procedures are in sequence : - reopening of the Bloomberg electronic auction system - introduction of the bids via fax - introduction of the bids via telephone

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IV. INTERNATIONAL COMPARISON : IV. INTERNATIONAL COMPARISON : SOME EMU COUNTRIES (1)SOME EMU COUNTRIES (1)

A. GENERAL

Issuance calendars have become more important since the introduction of the euro

Since 1999, most of sovereign issuers in the euro-zone have reduced the number of auctions to issue larger amounts required by a more liquid market

Future intentions generally are given on an annual basis and technicalities of an issue are announced a few days prior to the auction

Most issuers issue at fixed & pre-announced dates (EFC Progress Report on National Issuing Calendars and Procedures for EU National Government Bills and Bonds, Oct. 2000)

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IV. INTERNATIONAL COMPARISON : IV. INTERNATIONAL COMPARISON : SOME EMU COUNTRIES (2)SOME EMU COUNTRIES (2)

B. FRANCE

BTFs (Treasury bills) = weekly auction on Monday

Treasury bonds = monthly on the1st Thursday for OATs and the 3rd Thursday for BTANs

Index-linked securities can be issued at the same day as OATs or BTANs

No bond auctions in August and December

Issuing calendars containing the auction data are published annually for OATs and

BTANs and quarterly for BTFs

Calendar is indicative

Lines to be sold are announced at the latest one week prior to the auction

with information on the volume of the issues.

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IV. INTERNATIONAL COMPARISON : IV. INTERNATIONAL COMPARISON : SOME EMU COUNTRIES (3)SOME EMU COUNTRIES (3)

C. GERMANY

Treasury discount paper with a maturity of 6 months (Bubills) auctioned monthly on

Monday - Other securities on Wednesday

Federal Treasury notes (Schätze) auctioned in March, June, September & December and

each of the issues is increased by auction in the following month

5 year Federal notes (Bobls) offered in February, May and October are increased in

the following month

Federal bonds (Bunds) newly issued in January and July with 2 re-openings in March, April

and August, September respectively

Issuing calendars = auction data, issues, ISIN code (+WKN code), type of issue, maturity and

volume are published on a yearly basis – details are published for each quarter in the 3rd ten-

day period of the month before that quarter – amounts & issue dates are subject to change

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IV. INTERNATIONAL COMPARISON : IV. INTERNATIONAL COMPARISON : SOME EMU COUNTRIES (4)SOME EMU COUNTRIES (4)

C. AUSTRIA

Bonds :

Interval of 6 weeks between the bond auctions held on Tuesdays

The maximum & minimum annual issuance volume is announced each December for

the forthcoming year (minimum issue amount for each auction is € 1 billion)

Target amounts and maturity are announced 1 week prior to the auction

Bills :

Bills are issued on a monthly basis (except for December), generally on Wednesdays

The Reuters page mentions :

- the auction & issued date

- the maturity dates

- the limit of the programme (2003 : 5 billion EUR) and the open limit

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V. CONCLUSION V. CONCLUSION

A. Predictable as much as possible key elements are auction data and volume (indication)

B. Flexibility is allowed but it remains important not to surprise the market.

This implies a co-operation with the market.