Annual report 2006 - Dexia.com

PUBLIC/PROJECT FINANCE
MANAGEMENT REPORT
COMPTES CONSOLIDÉS
COMPTES SOCIAUX
Belgium
Long-term commitments amounted to EUR 30.8 billion,
almost stable over 2005. 2006, an election year, was difficult
for Public Finance activity in Belgium, but even so Dexia succeeded
in maintaining its leadership.
In Public Finance, originations amounted to EUR 3.0 billion,
down 21.1%. This decrease is the consequence of a very
buoyant 2005 first half (driven inter alia by the inter-municipal
associations in the field of energy) and also of the traditional
slowdown generated in the local authorities segment by the
election period. In the social profit segment, total originations
reached EUR 404 million, up 11% year-on-year, enhanced by
a catch-up of investments in national health. Of note, the Walloon
Region selected Dexia to finance its economic recovery
plan. The bank also launched a secured electronic reporting
system for its clients in the public and social profit sector.
The Corporate and Project Finance activities benefited from
a revitalised commercial approach and a favorable economic
climate. In terms of long-term commitments, production was
very buoyant with originations increasing significantly by
49.4% to EUR 2.2 billion. Production was strong in most areas
of Belgian corporate banking, in particular:
• general corporate banking with important transactions
in the utility sector, but also a substantial number of
transactions in the so-called midcorporate and corporate
segments;
• in the area of project finance where Dexia was able to consolidate
its strong position in shipping finance and harbour
infrastructure finance. Moreover, Dexia confirmed its role as
financial advisor in the major infrastructure PPS-transaction
for Oosterweel since its client Noriant was being withheld as
sole candidate to continue into the next phase. In addition,
the bank took part in the financing of three wind farms and
a biomass plant;
• several real estate transactions have been pursued, often with
clear links to local, federal or supranational government;
• in asset finance (mainly leasing and renting) a substantial
55% gain in long-term financing was realized, up to a level
of EUR 357 million.
• finally it should be noted that the Belgian corporate finance
department worked on the IPO’s of, inter alia, Aedifica and
Metris.
Luxembourg
Steady growth of the long-term commitments was observed
to EUR 2.1 billion, up 7.9%. On the origination side, the
year was correct, taking into account the significant transaction
(EUR 0.4 billion) closed in 2005, with the Luxembourg
Railways.
above, Dexia co-led a GBP 2.4 billion debt package for the
acquisition of the biggest harbor company in the United Kingdom
by a consortium of financial investors. This transaction
was successfully syndicated to a total of 31 banks. As sole
arranger, Dexia also closed several significant PFI transactions
in the health, education and public lighting sectors, including
a GBP 212 million hospital project in Glasgow, the largest ever
bank-financed PFI project in the UK and the largest PFI project
ever in Scotland.
Sweden
Activity was sustained, reaching EUR 1.1 billion, up 15.9%,
and Dexia recorded gains in market share. Long-term commitments
saw a 9.3% rise, to EUR 3.9 billion.
Italy
In 2006, Dexia Crediop reached EUR 37.3 billion in long-term
commitments, up 9.1% over the last twelve months. On the
Public Finance front, the comparison is biased by a number
of exceptionally large-scale operations in 2005. Nevertheless,
the activity was sustained for local authorities, in the international
issues and securitization transactions segment where
production was up 16%. In 2006, it is worth mentioning the
EUR 160 million loan to the municipality of Turin, co-arranged
by Dexia Crediop, and also the underwriting of a EUR 1.8 billion
securitization mandated by the Lazio Region. 2006 was
marked by the largest Eurobond ever issued by an Italian local
authority: the loan issue by the Piedmont Region, which was
joint booked and joint lead-managed by Dexia Crediop for a
final take of EUR 765 million. Dexia Crediop was also joint
bookrunner, joint lead and co-arranger of a EUR 327 million
transaction with the Abruzzi Region. These deals, along with
a significant loan volume for instance with the Province of
Turin (EUR 121 million in two transactions) enabled Dexia Crediop
to keep its market share above 40% (excluding Cassa di
Depositi e Prestiti) in the public sector segment, consolidating
its leadership among non-State-owned Public Finance actors
in the country.
Originations in Project Finance were down 62.1%, to
EUR 664 million, in a very tough and competitive environment,
and in the absence, this year, of large-scale deals in the
infrastructure sector. Dexia Crediop nevertheless appears very
well positioned in this market in Italy.
United Kingdom
Long-term commitments reached EUR 9.5 billion, a 40.3%
growth in one year. This increase stems from very buoyant
Project Finance activity, and a more mixed trend in the public
sector: originations in social housing were strong (+74%), but
the local authorities segment was less buoyant. As discussed
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Dexia / Annual Report 2006