Danish Government
Borrowing and Debt

Foreword

Key Elements of the Government Debt Policy

Main Principles

1. Main Principles of Government Borrowing
1.1 Summary
1.2 Management of the Government Debt
1.3 The norm for Domestic and Foreign Borrowing
1.4 Targets and Benchmarks in the Government Debt Policy
1.5 Strategy and Instruments for Central-Government Borrowing
1.6 Risk Management of the Government Debt
1.7 Market Structure and Borrowing in Practice
1.8 Information Policy

Report Section

2. Domestic Borrowing
2.1 Summary
2.2 Development in Interest Rates
2.3 Financing Requirement
2.4 Government Securities Issuance and Strategy
2.5 Buy-backs
2.6 Securities Lending

3. Foreign Borrowing
3.1 Summary
3.2 Foreign Borrowing Strategy
3.3 Foreign Borrowing in 2003

4. Interest-Rate and Currency Swaps
4.1 Summary
4.2 The Market for Interest-Rate Swaps
4.3 Central Government's Use of Interest-Rate Swaps
4.4 Central Government's Use of Currency Swaps

5. The Social Pension Fund
5.1 Summary
5.2 SPF's Capital
5.3 SPF's Securities Lending Facility

6. Risk Management of Central-Government Debt
6.1 Summary
6.2 Risk Management
6.3 Interest-Rate Risk
6.4 Exchange-Rate Risk
6.5 Credit Risk
6.6 Operational Risk

7. Government Debt and Government-Guaranteed Entities
7.1 Summary
7.2 Government Debt and Interest Costs
7.3 The Gross Debt of the General Government (EMU debt)
7.4 Ownership Distribution of Government Securities
7.5 Government-Guaranteed Entities

Special-Topic Section

8. The Treasury Bill Programme
8.1 Summary
8.2 The Treasury Bill Programme and the Government Debt Policy
8.3 Treasury Bill Auctions
8.4 Secondary Trading in Treasury Bills

9. MTS Denmark and the Primary Dealer System for Danish Government Securities
9.1 Summary
9.2 The Primary Dealer System for Danish Government Securities
9.3 MTSDk
9.4 MTS Associated Markets (MTSAM)
9.5 The First Months' Experience with MTSDk
9.6 Electronic Trading in all Segments of the Danish Government Securities Market

10. Re-lending to Danish Ship Finance
10.1 Summary
10.2 Background
10.3 Agreements Regarding Re-lending to DSF
10.4 Structure and Pricing of Re-lending
10.5 Implications for Government Debt Management

11. Interest-Rate Risk Management – New Initiatives
11.1 Summary
11.2 The Framework for Management of Interest-Rate Risk on Central-Government Debt
11.3 Exposure and Risk Measures
11.4 Scenarios for the Central Government's Interest-Rate Exposure and Risk

Appendices

Information on Government Borrowing and Debt

Principles for Management of the Credit Risk on Government Swaps

Terms for the Central Government's and the Social Pension Fund's Securities Lending Facilities

Announcements on the Central Government's Borrowing and Debt (Translations)
Danish Government Debt Management Strategy 2004, 17 December 2003
Electronic Trading and Market-Making in Danish Government Bonds, 16 October 2003

Appendix of Tables
1. Central-Government Debt, Year-End 1993-2003
2. Domestic Government Securities Issued in 2003
3. Central-Government Foreign Borrowing Transactions in 2003
4. Swaps and Foreign-Exchange Forward Transactions, etc.
5. Central-Government Domestic Debt as of 31 December 2003
6. Central-Government Foreign Debt as of 31 December 2003
7. Service on Central-Government Domestic Debt, End-2003
8. Service on Central-Government Foreign Debt, End-2003
9. Kingdom of Denmark's Rating in Domestic and Foreign Currency
10. Rating of Selected Countries' Central-Government Debt

Glossary