Update on Finnish central government borrowing · •Euro benchmark bond curve to 30 years •Two syndicated bonds per year •Going forward expect 2 to 4 auctions annually •Liquidity

June 2019

Finnish centralgovernment borrowing

Update on

22

Credit ratings

The government has credit ratingsfrom three credit rating agencies: S&P Global Ratings, Moody’sInvestors Service and Fitch Ratings. For long-term debt, they are

AA+, Aa1 and AA+(stable, stable, positive)

33

1Finnish economy

Republic of Finland I State Treasury2

44

• Growth continues although at lower rates

• Housing construction return to normal main reason for slower investment growth

• Declining unemployment rate, employment rate 71,6 % in 2018

• Improving public finances, debt ratio below 60% of GDP

Economic outlook stable2018 2019 2020

GDP change % 2.4 1.6 1.2

Inflation, % 1.1 1.2 1.5

Current account, %/GDP -1.9 -1.5 -1.4

Private investment change, % 3.3 0.4 1.8

Exports change % 1.5 2.9 2.9

Unemployment rate, % 7.4 6.6 6.3

Public deficit, %/GDP -0.6 -0.5 -0.2

Public debt, %/GDP 58.9 58.3 57.8

Source: Ministry of Finance 6/2019

55

Economic growth broad-based, net exportscontinue to contribute

Source: Ministry of Finance, 6/2019

%

-2

-1

0

1

2

3

4

5

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020* 2021*

Net exports Gross investments

Other domestic demand GDP change

66

Current account on a positive trend, steadyimprovement in terms of trade

Source: Ministry of Finance 6/2019

-2

-1,5

-1

-0,5

0

0,5

1

1,5

2

2,5

09 10 11 12 13 14 15 16 17 18 19** 20** 21**

% of GDP

Current Account Balance of goods and services

77

Exports by countries of destination 2018

Exports of goods well diversifiedExports by industries 2018

Source: National Board of Customs 2/2019

Euro area (exc. Germany, Baltics)

19 %

Germany15 %

Sweden10 %

Asia (exc. China)9 %

Rest of Europe8 %

USA7 %

Rest of the World7 %

Russia5 %

China6 %

Nordics (exc. Sweden)

5 %

UK4 %

Baltics5 % Forest industry

21 %

Chemical industry

13 %

Manufacture of machinery and

equipment13 %

Wholesale and retail trade

14 %

Other industries11 %

Manufacture of metal and metal

products12 %

Electric and electronics

industry9 %

Manufacture of transport

equipment7 %

88

Labour costs competitiveness improvingHourly labour cost % change from previous year

Source: Eurostat

-4

-2

0

2

4

6

8

10

Euro area (19 countries) Finland

99

Relative housing prices in Finland

Source: Bank of Finland, 5/2019

Index, 1981/I = 100

50

70

90

110

130

150

170

190

210

230

maali

s.81

kesä

.82sy

ys.83

joulu.

84ma

alis.8

6ke

sä.87

syys

.88jou

lu.89

maali

s.91

kesä

.92sy

ys.93

joulu.

94ma

alis.9

6ke

sä.97

syys

.98jou

lu.99

maali

s.01

kesä

.02sy

ys.03

joulu.

04ma

alis.0

6ke

sä.07

syys

.08jou

lu.09

maali

s.11

kesä

.12sy

ys.13

joulu.

14ma

alis.1

6ke

sä.17

syys

.18

Housing prices relative to rents Housing prices relative to wage and salary earnings

1010

EMU general government financial balance,in ratio to GDP, %

Source: European Commission Economic forecast, summer 2019

-4

-3

-2

-1

0

1

2

Greece Germany Netherlands Ireland Austria Finland Portugal Belgium Italy Spain France

2017 2018* 2019* 2020*

1111

The public debt-to-GDP ratio in Finland is one of the lowest in the euro areaEMU general government gross debt, % of GDP

Source: European Commission Economic Forecast, Spring 2019

0

20

40

60

80

100

120

140

160

Finland Netherlands Germany Ireland Austria France Spain Belgium Portugal Italy2017 2018* 2019* 2020*

1212

Earnings-related pension assetsas % of GDP 2018*

*) including public sector pension assets. Source: Finnish Pension Alliance 5/2019

62,266,3 65,6

54,3

6973,8

69,274,9

79,884 86,1 87,3 89,3

82,8

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% of GDP

1313

2Funding

1414

Central government gross borrowing estimateand projected funding instrument allocation

Sources: State Treasury, Ministry of Finance (* forecasts)

0

5

10

15

20

25

2019* 2020* 2021* 2022* 2023*

EUR bn

Redemptions Net Borrowing

0

5

10

15

20

25

2019* 2020* 2021* 2022* 2023*

EUR bn

Euro syndications Euro tap auctions

1515

01000200030004000500060007000€ million

By Maturing Year

• Euro benchmark bond curve to 30 years• Two syndicated bonds per year • Going forward expect 2 to 4 auctions

annually• Liquidity in focus – Primary Dealers and

3 inter-dealer platforms• EMTN issuance complements Euro

benchmark bonds

Funding strategy“Maintaining a globally diversified investor base by geography and investor type”

Benchmark/serial bonds outstanding

1616

10-year government bond yield spreads to Germany

1717

Primary Dealers 2019Bank of America Merrill Lynch Barclays CapitalBNP ParibasCitigroupCrédit AgricoleDanske BankDeutsche BankGoldman SachsHSBCJ.P. MorganNatWest MarketsNomuraNordeaSociété Générale

1818

Investor base for RFGB 0.5% EUR 3bn due September 2029

• Launched in February 2019

• Allocated to 170 investors

FINLAND; 25%

UK; 17%

BENELUX; 16%

OTHER EUROPE;

11%

FRANCE; 11%

GER/AUS/SWITZ; 7%

AMERICA; 6%

SCANDINAVIA; 6%

MEA; 1%

PENSION FUNDS,

INSURERS; 35%

BANKS; 26%

FUND MANAGERS;

19%

CENTRAL BANKS,

OFFICIAL INSTITUTIONS;

12%

HEDGE FUNDS; 6%

OTHER; 2%

1919

Investor base for FINL 1,5% USD 1 bn due 2020

• Launched in September 2017

• Allocated to 50 investors

2020

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January 2019

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