Annual report 2005 - Dexia.com

Annual Report 2005Municipal sectorWith a total issue amount of USD 408 billion,the year 2005 recorded a market increaseof 13% over 2004. This is largely due tothe maintenance of very low interest ratesand the anticipation of their rise. The rateof penetration of credit enhancement onthe issues market, at 56%, was high (andindeed higher than that in 2004, 54%)and is explained in particular by the veryaggressive attitude of the competition, whichoffers very low premium levels. FSA insuredissues for a (gross) nominal amount ofUSD 65 billion, with a market share equal to26% (better that the previous year’s level of24%) and recorded USD 485 million in grossPV premiums, which represents an increaseof 12% over 2004.In the United States these good results areassociated with the momentum of creditenhancement activity for municipal issues,well-sustained activity in the health andeducation sectors and also the signature byFSA of a remarkable operation: ChicagoSkyway. This is the concession, on theEuropean PPP model, of a motorwaybelonging to the city of Chicago. Theoperation consisted of guaranteeing a bondissue of USD 1.4 billion, intended to financeits privatization. Moreover, the magazineEuromoney recognized the extremelyinnovative nature of this operation which itawarded a “Deal of the Year 2005” prize.Asset-backed securitiesIn the US asset-backed securities (ABS)sector, gross PV premiums fell by 16.6% toUSD 195 million by virtue of low margins ina market characterized by a strong appetiteof investors. It is important to note the fallof originations in the sector of real propertyloans to individuals, partially offset by a risein the securitization of home equity loans.FSA prefers to wait for margins to return tothe correct levels before again intensifying itsactivity in this segment.International transactionsAs regards international transactions, grossPV premiums reached USD 242 million in2005, or +29.9% in comparison to 2004. Theprincipal transactions took place in the UnitedKingdom with two important PPP projects inthe health sector.63