Issues in the money and capital markets
OeKB operates its funding activities in the international and domestic capital markets through
- the issuance of public bonds,
- tailor-made private placements,
- structured MTNs
- short-term products and
- taking up loans.
OeKB's multi-currency liability portfolio currently has a notional amount of 30 bn Euro (approx. USD 40 bn). Roughly three-quarters of OeKB's portfolio consists of long-term financing. The long-term funding volume amounts to 3 to 4 bn Euro (approx. 4 to 5 bn USD) per year.
Guarantee and Rating
OeKB's debt issuance is guaranteed by the Republic of Austria and its bond issues are Aaa/AA+ rated by Moody's and Standard & Poor's (short-term debt: P-1 and A-1+ respectively). OeKB also has a Aaa long-term Bank Deposit Rating from Moody's. Furthermore, OeKB's unguaranteed FCD program is rated P-1/A-1+ by the rating agencies.
Pricing and Portfoliomanagement
The pricing of single transactions as well as strategic portfolio allocation regarding duration and currency structure are done with the use of state of the art software tools and optimisation approaches. Efficient medium- to long-term cost and risk management strategies are implemented to manage the asset and liability portfolio. Accordingly, multi-period Monte Carlo simulation techniques and Markowitz principles are applied.
Derivatives/ Risk Policy
OeKB utilises derivatives - mainly swaps - to enhance funding levels and for both hedging and portfolio structuring purposes.
OeKB has strict internal guidelines concerning the credit quality of its counterparties (Minimum-Rating) and the monitoring of the current exposure (ISDA Master Agreements and the use of credit enhancements -Collateral Agreements).
In addition, OeKB's observation period regarding the future potential market and credit exposure associated with its derivatives goes beyond the standard 10 day horizon.
OeKB's issues are used exclusively in the export financing system. To date OeKB employs integrated Monte Carlo simulation software for the long-term valuation of market and credit risks of its portfolio.
Since Austria joined the European Union in 1995, OeKB has been exempted from the Banking Directive, and the regulations regarding the minimum level of own funds (minimum capital requirements) and large exposures do not apply to OeKB (Article 2 of the Directive 2006/48/EC relating to the taking up and pursuit of the business of credit institutions).