City of Paris
Investor presentation March 2016
1 Contents :
1. A leading European capital 2. Organization and responsibilities 3. Financial balances 4. Debt Management 5. Paris’ Climate Action Plan 6. An inaugural Climate Bond for Paris
Paris city hall
2
A leading European capital
3 A leading European city
. Paris has developed, through the ages, into a center of art, medicine, science, fashion, tourism, culture and finance, becoming one of the world's most influential global cities and the most visited city in the world (29 Million visitors in 2014*) * Source : Paris-Ile de France Tourist Board (CRT), 2015 . Paris is at the heart of the Ile-de-France Region, one of the wealthiest regions in Europe and main economic hubs
. Paris ranks among the top cities in the world in terms of livability and hosts one of the planet’s most vibrant cultural and artistic scenes
. As the capital, Paris is the political, administrative and business Seine banks transformed in pedestrian area center
4 A dynamic city with economic strengths
. The gross domestic product (GDP) of Paris represents 10% of France’s GDP. Its GDP per capita is equivalent to 3 times the EU-28 average* * See methodology by eurostat . It is essentially a service economy, with business and financial services (around 85 % of the GDP) . Business facilitated by top notch infrastructures and heart of Europe location
Harbour at Tolbiac, 13rd arrondissement • A hub of Europe’s economy. Paris region offers some of the most favorable economic conditions for setting up a business : 2 major airports, 5 container terminals along 310 miles of navigable waterways, 6 railway interchanges, 14 Unemployment rate (%) metro lines, 5 RER (regional express trains) lines, 7 tram lines, more than 300 bus lines,… 10 9.9
• First European city for hosting of headquarters of top 500 global companies 9 8.8 8.3 • High foreign investments (13% of total foreign investment in France for Paris 8 – 2013) 7 . The unemployment rate is structurally lower than the national level 6 (see the attached graph)
Paris Ile-de-France Region France Source : Insee, 2014 5 A dynamic population
. With 12 million inhabitants, the region Ile-de-France where Paris is located Pyramid age structure represents almost 19 % of France’s total population (central Paris : 2.3 million) Paris France • Since 1999, the population of central Paris has increased by over 100,000 people Under 18 17,1% 22,2% 68,3% . This population is on average younger than the rest of the national territory 18 to 64 60,7% • The Paris region has over 600,000 students, including 335,000 within the city limits 14,6% Above 64 17,1% • 372 educational institutions (7 Universities, 2 IUT, 13 engineering schools, 37 business schools,…) Source : Insee, 2013 . A highly qualified workforce • 43.1 % of the working population are French executives in Paris • 6.5 % of Europe's researchers (over 130,000 people) are located in the Paris region
• A relatively strong share of new technology companies in Paris’ economy
Ile-de-France
ESPCI – Higher School of Industrial Physics and Chemistry of the City of Paris Source : Insee, Distribution of the graduates of Higher education according to the region of residence 2012
6
Organization & Responsibilities
7 Paris’ fields of responsibilities
. Paris is committed to the well being of its population, sustainable development, and supporting the French economy.
. By law, the fields of responsibilities cover :
Social services & Healthcare Elementary school Wattignies Urban planning
Primary and Secondary Schools
Culture
Environment
Economic development
Renovation of Les Halles district Water Management, Waste collection and recycling
Philharmonie concert hall
8
Paris institutions
Elected Party Representatives The Majority (90 seats) . Paris’ specific status : a City and a Department, run by the same Socialist Group and related 56 Council made up of 163 representatives who are elected every 6 Communist Group – Front de Gauche 13 years (last election : 2014) Green Group of Paris 16 • The Mayor and Deputy Mayors are elected by the Council of Paris Center-leftist Group and independents 5 th The Opposition (73 seats) . The French law on territorial reform (n°2015-991, 07 august 2015) seeks to simplify local administration in order to make it Les Républicains 54 more efficient UDI – MoDem 16
Non-Attached Members 3 . The city is the largest member of the Metropole de Paris which President of the Council of Paris was set up in 2016. Ms. Anne HIDALGO
Council of Paris 9
2016 : “Métropole du Grand Paris”
Map : distribution of inhabitants the metropolis (2016)
10 2016 : “Métropole du Grand Paris”
Métropole du Grand Paris : an intermunicipal body which is in charge of coordinating housing policy and urban planning over 131 municipalities (7 Million inhabitants) of the greater Paris area
. A gradual transfer of devolved responsibilities : • 2016-2017 : setting up of the Metropolitan Project and setting up of Master Development Plans (urban planning, energy distribution networks, pollution control, risk management,…) • 2018 : transfer of responsibilities
. A council of 209 elected members from the member’s cities (62 from Paris City)
. Budget : • EUR 3.8 bn • Income = Cities’ taxes transferred + State grants • Expenses = Devolved responsibilities + Compensation towards Cities
NO BUDGETARY IMPACT FOR PARIS
11 Paris’ relationship with the State
. French local and regional governments’ financial and administrative autonomy are constitutional principles.
. No explicit guarantee on local authorities’ debt from the State but close relationships :
The State guarantees the notion of general public interest :
3 types of central control : • controlling the legality of the city’s initiatives by the representative of the State for Paris Region • controlling public accountancy tasks and local authority budget by the Finance Ministry • checking by a public financial Court
The State guarantees financial backing : • by determining tax bases (local authorities are free to determine most of the tax rates) • by guaranteeing that local authorities receive tax revenues due • by giving local authorities monthly advances of local tax revenue • by compensating for devolved responsibilities
12
Financial balances
13 Local Authorities in France
20.9% 10.6% of public spending of the public deficit or EUR 252 bn or EUR 9.2 bn out of EUR 87.1 bn
58.8% 9.4% of public investment of public debt or EUR 50.4 bn or EUR 182 bn
Source : 2013 figures
14 Paris Budget structure
. A total budget* of EUR 9.3 bn
. Cautious budget planning as a matter of principle : - Execution rate (realized vs forecasted)**: Operating surplus = 127% External funding = 71%
. A structural and significant operating surplus**: EUR 639M
. Investment budget of EUR 1.7bn
. Golden rules imposed by the law : - operating income funds operating expenditures - debt amortization is paid by own resources
debt funds investment
* Consolidated budget 2016 (City +Department) ** On average over the last 6 years
15 A diversified operating income
Operating income = EUR 7.9 bn
2012 2013 2014 2015 2016 Taxes 65% 65% 63% 68% 68% State Grants 17% 16% 15% 13% 9% Compensation for new responsibilities 4% 4% 4% 4% 4% Subsidies and contributions 3% 3% 3% 4% 3% Fees concessions and services provided Fees concessions and services provided 6% 6% 5% 6% 6% 6% Others 5% 5% 8% 5% 9% Subsidies and Financial Income 0,3% 0,2% 0,4% 0,3% 0,3% contributions 3% Exceptional Income 0,1% 0,4% 0,5% 0,2% 0,1%
Compensation Direct Taxes Operational Income 100% 100% 100% 100% 100% for new 64% responsibilities 4%
Taxes State Grants 68% 9% Taxes on real estate Exceptional transactions Income 20% 0,2%
Financial Others Income Others 16% 0,3% 9%
Sources : Consolidated budget 2016 Administrative accounts 2012-2015 (2015 = forecast)
16 A diversified operating income
. A strong base for incomes : Dynamic tax income 1 200 Property taxes • Low tax rates compared to the national average 1 000 Residence taxes 800 • Dynamic tax income due to the population profile and 600 Business
solid economic activity base EURM property 400 contribution
• High potential for future income from concessions 200
• An ability to reform to face decreasing State grants 2012 2013 2014 2015 2016
Concession fees : increase on new tenders • Stability of other resources 250% 200%
150%
100%
50%
0% 2011 2012 2013 2014 2015
17 Low tax rates
. Tax level comparison :
120%
100%
80%
60%
40%
20%
0% Paris Lyon Marseille Lille Toulouse Nice Nantes
Residence tax Property tax (developed properties) Property tax (undeveloped properties)
18 Operating expenditures
Financial charges Exceptional Others Operating expenditures = EUR 7.6 bn 1.8% charges 2% 1%
Contributions towards local authorities Personnel costs 2012 2013 2014 2015 2016 18% 29% Personnel costs 30% 29% 29% 29% 29% General expenditure 12% 11% 11% 11% 10% Social Aid 22% 21% 21% 21% 21% Subsidies 6% 7% 7% 7% 7% Contributions Contributions towards public authorities 11% 11% 11% 10% 10% towards public Contributions towards local authorities 16% 16% 17% 18% 18% authorities Others 2% 2% 2% 2% 2% 10% Financial charges 1,4% 1,5% 1,7% 1,6% 1,8% General Exceptional charges 1% 1% 1% 1% 1% expenditure Subsidies 10% Operational expenditure 100% 100% 100% 100% 100% 7% Social Aid 21%
Source: Consolidated budget 2016 Administrative accounts 2012-2015 (2015=forecast) 19 Controlled operating expenditures
. Operating expenditures strictly controlled
• Human resources costs and general charges under tight control helped by administrative reform
• Social aid stable despite adverse economic situation and high level of non-compulsory expenditures
• Contributions towards public authorities expected to decrease
• Transfers towards other local authorities increased substantially in the last years Source : Administrative accounts (2015 = forecast)
20 An ability to reform
2016 Savings on general expenditures EUR -34M Decrease in communication expenditures, IT expenditures, road maintenance…
Non-compulsory subsidies EUR -19M
Human resources costs EUR -24M Structural reforms
21 Investment budget
A high level of self financing enabling a high level of Investment : ₋ Investment = EUR 1.69 bn over the last 6 years ₋ self financing = 80%
Yearly Investment 2 000
1 600
1 200
800
400
Social housing – street bleue 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Consolidated budget 2016 (City + Department) Administrative accounts 2006/2015 (2015=forecast) 22 22 Investment budget
2014 – 2020 Municipal solidarity and families 12%
Housing and social diversity 30%
Public EUR bn Culture and transport heritage 10 and soft 5% mobility 11% for the future of Paris Environmentally-friendly city
9% Participatory budgeting 5% Smart city and attractiveness 8%
Urbanism end redevlopment of public space Sports 16% 4%
23 23 Debt comparison
Debt per capita (EUR)
3 915 3 810
2 800 2 481 1 935
Paris Marseille Lyon Lille Cities over 100K inhab.
- Paris : City+Department (déc 2015) - Marseille : City+Department+Urban community (déc 2014) - Lyon : City+Department+Urban community (déc 2014) - Lille : City+Department+Urban community (déc 2014) - Cities over 100K inhab.: Average City over 100K inhab+Department+Urban community (déc 2014)
24
Debt Management
25 Debt management
.To minimize present and future financial burdens
.To maintain the City’s ability to raise funds whenever necessary • A pragmatic and skilled management :
Sophisticated debt management In house pricing tools Stress-tests are run periodically,…
• A conservative debt management :
Use of vanilla products (1) A limited interest risk exposure : no structured products (2) No currency risk (3) (1)+(2)+(3) 100% of the debt ranked « A1 » (lowest risk) according to Gissler risk score card Management of counterparty risk An ability to raise funds via various channels A smooth debt amortization profile
26 Debt and Cash Management
A linear debt amortization profile... …facilitating the mandatory debt service obligation (art. L2321-2 from Local Authorities Code) 4 446 4 500 4 246 4 052 4 000 3 866 3 661 3 452 3 500 3 202
3 000 2 902 2 617 An average maturity of 9.7 years
2 500 2 327 EURM 2 037 2 000 1 751 1 476 1 500 1 176
1 000 911 711
500 316 251 231 181 161 161 141 126 86 36 36 36 36 36 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Outstanding as of 01/01 4 446 4 246 4 052 3 866 3 661 3 452 3 202 2 902 2 617 2 327 2 037 1 751 1 476 1 176 911 711 316 251 231 181 161 161 141 126 86 36 36 36 36 36 Amortization 200 194 186 205 210 250 300 285 290 290 286 275 300 265 200 395 65 20 50 20 0 20 15 40 50 0 0 0 0 36
27 Debt and Cash Management
Initial debt Outstanding debt
Floating rate Floating rate 13% 18%
An interest rate risk limited Fix rate 82% Fix rate 87%
Hedging NOK JPY CHF HKD 2,6% 1% 5% 0,4%
EUR No currency risk 100%
EUR 92%
28 Debt and Cash Management
Pragmatic Management…
Systematic evaluation of the different funding opportunities: Credit Loans vs Bonds, Private Placements vs public bonds,…
Schuldschein 7%
Public issues Bonds 41% Sub Sov Loans 75% 14% Private placements 59%
Bank Loans 5%
… which enables low global funding costs
29 Debt and Cash Management
City of Paris funding rate
5,0
4,5
4,0
3,5
3,0
% 2,5 Paris 15 years
2,0 Spread vs OAT
1,5
1,0
0,5
0,0
60 40 20 bp 0 -20 -40 EIB loans
30 Debt and Cash Management
Interest paid on outstanding debt Funding rate on new borrowings
Year Interest paid (%) 2011 - 2015 2013 2.91 2014 2.78 2015 2.45 Year Maturity (years) Yield (%) Spread / OAT (bp)
2011 13.8 3,91 8 2012 14.7 3,25 27 2013 15.0 2,95 16 2014 12.4 1,91 13 2015 16.9 1,59 24 2015
Trade date Type Nominal (EURM) Maturity (years) Yield (%) Spread / OAT (bp) 05/03/15 Schuldschein 50 25 1.54 20 05/03/15 Private placement 110 15.2 1.21 20 11/03/15 Schuldschein 40 24 1.20 19 07/09/15 Private placement 50 15 1.72 22 09/09/15 Private placement 40 15 1.80 25 11/09/15 Schuldschein 15 23 2.10 25 15/09/15 Private placement 20 20 2.01 25 15/09/15 Private placement 20 22 2.08 25 14/10/15 Private placement 35,5 30 2.10 25 10/11/15 Bond issue 300 15.5 1.81 30 07/12/15 EIB loan 60 7.0 0.49 9 Total 741 Weighted average 16.9 1,59 24
31 Debt and Cash Management
. Cash management and short term funding capacity :
Cash Position for 2016 Commercial paper program EUR 800M 600 000 000 Banks credit lines EUR 400M
EIB credit line EUR 68M 500 000 000
400 000 000 EUR 1.3bn
300 000 000 EUR
200 000 000
100 000 000
0 1/1/16 1/2/16 1/3/16 1/4/16 1/5/16 1/6/16 1/7/16 1/8/16 1/9/16 1/10/16 1/11/16 1/12/16
-100 000 000
32 Financial rating
. High rating for a local authority in France
« revenue flexibility » « moderate indebtedness » « strong liquidity and prudent debt management » (AA / Negative / F1+) « highly efficient management» « diversified economy»
« very strong economy in an international context » « strong financial management » « high financial transparency, and detailed financial planning » « exceptional liquidity position » « prudent and sophisticated debt and liquidity management » (AA / Negative / A-1+) « low contingent liabilities » « sizable disposable assets »
33 ESG Rating and awards
. City of Paris is leader of the sector (1st among local authorities rated by Vigeo) :
. Global score = 64/100 (vs 43/100 on average for the sector)
Legend : . ++ means leading score . + means score higher than the average
. Sustainability Performance :
. Stable since last review
. Overall Advanced* performance, above average scores in all domains, * Vigeo scale of assessment : advance, robust, limited, weak
. Paris graduated as “Positive energy territory” by the French Ministry for Ecology, Sustainable Development and Energy
34 Contacts and Documentation
Internet site : http://www.paris.fr/
- Budget documents : http://www.paris.fr/municipalite/l-hotel-de-ville/budget-de-la-ville-de-paris-2529
- Debt documents : http://www.paris.fr/municipalite/l-hotel-de-ville/taxes-et-impots-2318#programme-d-emissions-de-titres-emtn_10
- Vigeo documents : http://www.vigeo.com/csr-rating-agency/en/3-1-investisseurs-et-gestionnaires-d-actifs
Xavier GIORGI Alain BOURG Contacts : +33 1 42 76 35 13 +33 1 42 76 34 21
[email protected] [email protected] Head of Funding Debt Management
35 Disclaimer
This document is not to be used or considered as an offer to sell or solicitation of an offer to buy any securities, and should not be considered as a recommendation by the City of Paris (“Mairie de Paris") that any recipient of this document should subscribe for or purchase any securities. Some information or opinions contained in this document (i) have been compiled or arrived at by the City of Paris from sources believed to be reliable, but the City of Paris does not make any representation as to their accuracy or completeness and (ii) are given at the date mentioned in the presentation and are subject to change without notice. This document is not to be relied upon as such or used in substitution for the exercise of any independent judgment and each recipient must make his or her own investigation as to the opportunity of any investment in the City of Paris.
36