#1FFEE Sustainability Bond Comunidad Foral de Navarra An opportunity to link financial policy to sustainability | || || || Nafarroako Gobernua Gobierno de Navarra#2Navarra Surface area 10,391 km² Population 2019 653,846 2 Nafarroako Gobernua Gobierno de Navarra#3Navarra is... ...an advanced DD € region focused on innovation, with its own tax system and highly qualified professionals. ...a sustainable region: environmentally-friendly, leader in renewable energies and high standard of living. ...a stable region with a moderate inflation, a controlled debt and a high financial rating. 3 Nafarroako Gobernua Gobierno de Navarra#4NAVARRA IS AN ADVANCED REGION#5Navarra is an advanced region 5 GROSS DOMESTIC PRODUCT (GDP) per capita in PPS is 13% above the European Union average in 2017 (EUROSTAT) Nafarroako Gobernua Gobierno de Navarra#6Navarra is an advanced region País Vasco NAVARRA La Rioja Aragón Cantabria Cataluña Islas Baleares Castilla y León Madrid Galicia Asturias TOTAL NACIONAL C. Valenciana Murcia Castilla-La Mancha Canarias Andalucía 10,4 The second lowest regional UNEMPLOYMENT RATE (INE) Extremadura 0,0 6,0 12,0 18,0 24,0 6 Nafarroako Gobernua Gobierno de Navarra#7an advanced region Navarra is an Índice de talento: ranking global y por pilares para las comunidades Posición en 2017 Tres primeros puestos PILARES Tres últimos puestos ÍNDICE GLOBAL 1 2 3 Generar Atraer Desarrollar 4 Retener 5 Capacidades técnicas 6 Conocimiento Madrid 1 2 1 1 4 1 1 Navarra 2 6 6 3 1 3 3 Cataluña 3 4 2 2 9 5 4 País Vasco 4 1 17 5 8 00 2 2 Asturias 5 8 16 6 3 6 7 Aragón 6 9 9 10 6 8. 5 La Rioja 7 7 13 13 2 9 6 Cantabria 8 5 15 8 5 4 11 Castilla y León 9 11 12 11 7 13 9 Com. Valenciana 10 12 5 4 16 10 10 Baleares 11 14 3 15 13 7 8 Galicia 12 16 CO 9 11 11 14 Andalucía 13 13 7 7 14 16 12 Extremadura 14 3 14 12 10 17 17 Murcia 15 10 11 14 12 14 13 Cast.La Mancha 16 15 10 16 15 12 16 Canarias 17 17 4 17 17 15 15 Fuentes: Ivie y Cotec BELEN TRINCADO/CINCO DÍAS Good position in the Regional Talent COMPETITIVENESS Index 2017 7 Nafarroako Gobernua Gobierno de Navarra#8Navarra is an advanced region 8 Rank in the Economic Complexity Index, 2016 The Economic Complexity Index takes data on exports, and reduces a country's economic system into two dimensions: (1) The number or 'diversification' of products in the export basket, and (ii) the quality, or 'ubiquity' of products in the export basket. This map ranks countries by ECI scores. The highest rank is 1 and corresponds to the country with the most complex economy in that year. No data 0 20 40 60 80 >100 Source: ECI - Observatory of Economic Complexity (2016) Our World in Data ✰ CC BY Higher rank in the ECONOMIC COMPLEXITY INDEX (ECI) than the rest of the regions in Spain High values of ECI are associated with regions that export many different kinds of sophisticated goods that are only produced by a handful of other regions with similar diversified productive capacities Nafarroako Gobernua Gobierno de Navarra#9GDP pc 2011-2017 (thousands) €) Navarra is an advanced region Higher ECI values are related with higher GDP per capita values... ... and lower temporary employment rate 35.000 30.000 25.000 ESP GAL CAN 20.000 EXT AND 15.000 40 45 50 50 MAD PV NAV CAT CL 35,0 AND 30,0 CAN Temporary Employment Rate (%) 25,0 £20,0 EXT ESP ARA PV NAV CAT CANT CL MAD 15,0 55 60 40 45 50 55 60 Source: Caixabank Research and Economic Policy Service. Nafarroako Gobernua Gobierno de Navarra 9#10% Affiliates Navarra/Spain Navarra is an advanced region % Variation in affiliates 2016-2018 10 4,0 3,0 2,0 1,0 Manufacturing Human health and social work activities Education Arts, entertainment and recreative activities GROWTH EMPLOYMENT in strategical activities (S3 Strategy) Information and communication 0,0 -5,0 0,0 5,0 10,0 % Variation in affiliates 2016-2018 Source: Ministry of Labour, Migrations & Social Security. Administrative activities 15,0 Nafarroako Gobernua Gobierno de Navarra#11Navarra is an advanced region Innovation Leaders Strong Innovators Moderate Innovators Modest Innovators REGIONAL INNOVATION INDEX (RII): 11.4% above that of the score of Spain in 2017 EUROSTAT 11 Nafarroako Gobernua Gobierno de Navarra#12Navarra is an advanced region R&D expenses over GDP in % 2017 Strong commitment with R&D and innovation País Vasco Navarra Madrid Cataluña Castilla y León TOTAL NACIONAL C. Valenciana Galicia Murcia Andalucía La Rioja Aragón Cantabria Asturias Extremadura Castilla-La Mancha Canarias 0,0 0,5 1,0 10 Source: INE. 1,20 1,73 1,5 2,0 12 Nafarroako Gobernua Gobierno de Navarra#13Navarra is an advanced region Annual GDP Growth in percentage 3,6 3.2 9 2,9 2,4 2.5 2,3 2,0 1,8 1,4 1,5 3,2 1.9 Robust GDP GROWTH since 2014, specially in the last two years 2014 2015 2016 2017 2018 - Navarra - Spain EU Source: Nastat, INE, Eurostat. 13 Nafarroako Gobernua Gobierno de Navarra#14IV-2007 Source: Nastat, INE. Navarra is an advanced region Both, domestic and external DEMAND, remain SOLID SPAIN NAVARRA IV-2007 Domestic demand contribution GDP in pps External demand contribution GDP in pps 2008 Nafarroako Gobernua Gobierno de Navarra 2017 2018 14#15Navarra is an advanced region Real GDP growth forecast 2019 BBVA 2.4% Hispalink 2.5 % Laboral Kutxa 2.8% GDP GROWTH in Navarra will continue around 2.5% - 2.8% Funcas 2.8% in 2019... Ceprede 1.9% AVERAGE 2.5 % Source: BBVA, Hispalink, Laboral Kutxa, Funcas. 15 Nafarroako Gobernua Gobierno de Navarra#16Navarra is an advanced region ...similar to our BASELINE SCENARIO Navarra macroeconomic framework 2019 2019 Real GDP Nominal GDP 2.7 4.4 GDP Deflactor 1.7 Employment 2.2 Consumer prices (annual average) 1.5 Source: Government of Navarra. 16 Nafarroako Gobernua Gobierno de Navarra#17NAVARRA IS A SUSTAINABLE REGION#18Navarra is a sustainable region Navarra is aligned with UN SDGs 2030 18 OBJETIVOS DE DESARROLLO SOSTENIBLE ODS 2030 EN NAVARRA Nafarroako Gobernua Gobierno de Navarra#19Navarra is a sustainable region ENVIRONMENTAL DIMENSION 19 STRATEGIC VISION "Navarra, culturally sustainable territory" Nafarroako Gobernua Gobierno de Navarra#20Navarra is a sustainable region ENVIRONMENTAL DIMENSION 20 Instrumentos Sectoriales Plan de Residuos de Navarra 2017-2027 Plan Industrial de Navarra 2020 Plan Energético de Navarra Horizonte 2030 Plan de Ciencia, Tecnología e Innovación 2030 Instrumentos Transversales Programa de Desarrollo Rural de Navarra 2014-2020 Objetivos de Desarrollo Sostenible- 2030 Estrategia Especialización Inteligente S3 Klina Hoja de Ruta del Cambio climático Plan de Economía Social 2017-2020 Plan de Formación Profesional 2017- 2020 Plan Director del Ciclo Integral del Agua de uso Urbano 2019-2030 Plan Forestal (en revisión) Navarra has developed a comprehensive planning process focused to achieve the UN SDGS 2030... Nafarroako Gobernua Gobierno de Navarra#21Navarra is a sustainable region ENVIRONMENTAL DIMENSION ...including the joint approval Plans: KLINA and ENERGY 2030 KLINa 21 Nafarroako Gobernua Gobierno de Navarra#22Navarra is a sustainable region ENVIRONMENTAL DIMENSION MITIGATION GOAL: a 45% reduction in greenhouse gas emissions in 2030 ADAPTATION GOAL: reducing the effects of climate change and raising the awareness among population to make Navarra more resilient 22 Nafarroako Gobernua Gobierno de Navarra#23Navarra is a sustainable region SOCIAL DIMENSION Main GOALS: @ Promoting social mobility and inclusion Promoting social cohesion Reducing of unemployment and income inequality Nafarroako Gobernua Gobierno de Navarra 23#24Navarra is a sustainable region SOCIAL DIMENSION Social mobility and inclusion: right to social inclusion and guarantee minimum income 24 SGD 1 indicators Severe poverty rate with stable regional threshold At-risk of poverty or social exclusion rate (AROPE indicator) People at risk of poverty after social transfers Severely materially deprived people 2015 2016 2017 4.4 6.4 4.7 13.0 13.0 13.5 9.6 9.0 8.3 2.2 3.4 0.3 People living in households with very low work intensity 7.1 8.4 8.2 Population living in a dwelling with a leaking roof, damp walls, floors or foundation or rot in windows frames of floor 14.0 Population living in a dwelling with a leaking roof, damp walls, floors or foundation or rot in windows frames of floor 2.3 4.5 4.5 Nafarroako Gobernua Gobierno de Navarra#25Navarra is a sustainable region SOCIAL DIMENSION Social cohesion: equal opportunities for men and woman and specific economic and fiscal policies 25 SGD 10 indicators Purchasing power adjusted GDP per capita 2015 2016 2017 29,200 30,000 Relative median at-risk-of-poverty gap 36.6 37.1 Gini coefficient of equivalised disposable income 30.8 31.6 Income share of the bottom 40% of the population 20.9 21.0 First-time asylum applicants 40 116 283 People at risk of poverty after social transfers 9.6 9 8,3 Nafarroako Gobernua Gobierno de Navarra#26Navarra is a sustainable region SOCIAL DIMENSION Social cohesion: equal opportunities for men and woman and specific economic and fiscal policies 26 SGD 5 indicators Digital gender gap Women employed in R & D sectors 2015 2016 2017 5,2 37,8 38,5 Gender equality Index 69,2 Gender pay gap in unadjusted form 18,7 18,0 Gender employment gap 9,9 10,2 13,0 Seats held by women in parliament and local government 43,4 50,5 Positions held by women in senior management 27.0 31,2 30,9 Physical and/or sexual violence by a partner or a non-partner 6.2 Inactive population due to caring responsabilities Early school leavers 14,7 12,8 12,3 10,8 13,4 11,3 Nafarroako Gobernua Gobierno de Navarra#27Navarra is a sustainable region SOCIAL DIMENSION Unemployment and income inequality 27 SGD 8 indicators People aged 15 to 29 year old not in employment Men Total employment rate Long term employment rate 2015 2016 2017 12.3 14,1 14,3 12.4 12.2 9,0 68,5 69,3 72,1 7,6 7,1 4,7 Involuntary temporary employment rate 24.2 24,8 22,0 Inactive population due to caring responsibilities 14,7 12.8 12,3 Incidence rate of accidents at work 3.8 3.4 3,9 % Total expenditure of public funds on social protection and employment programs over budget 10,2 Total general government expenditure on social protectionand employment programs (% GDP) 20,5 Nafarroako Gobernua Gobierno de Navarra#28Navarra is a sustainable region SUSTAINABILITY BOND 28 Issuer |Comunidad Foral de Navarra A+ (post) by S&P Issuer Ratings Nominal Amount EUR 50,000,000 Listing Issue date AIAF 30/4/2019 Expiration date 30/4/2044 Denominations EUR 1,000 Issue price 98.812 % Coupon 2.10% Gov Law and Documentation ISIN Code Use of Proceeds Dealer Target Market Spanish Law ES0001353442 According to the Navarre Sustainability Bond Framework; this Sustainability Bond will finance and Green and Social Projects. BBVA The target market for the Bonds is professionals and eligible counterparties (all channels for distribution), each as defined in MIFID II. Nafarroako Gobernua Gobierno de Navarra#29Navarra is a sustainable region SUSTAINABILITY BOND FRAMEWORK - Use of proceeds (1) Elegible Categories SDG AFFORDABLE HOUSING 1 FIN DE LA POBREZA 11 COMUNIDADES CIUDADES Y SOSTENIBLES ACCESS TO ESSENTIAL SERVICES: EDUCATION & HEALTHCARE SALUD Y BIENESTAR W EDUCACIÓN DE CALIDAD 10 REDUCCION DE LAS DESIGUALDADES SOCIOECONOMIC ADVANCEMENT EMPLOYMENT GENERATION RENEWABLE ENERGY 1 FIN DE LA POBREZA 5 IGUALDAD DE GENERO EDUCACIÓN DE CALIDAD TRABAJO DECENTE Y CRECIMIENTO ECONOMICO ENERGÍA ASEQUIBLE Y NO CONTAMINANTE 13 ACCION POR EL CLIMA 10 REDUCCIÓN DE LAS DESIGUALDADES 29 Nafarroako Gobernua Gobierno de Navarra#30Navarra is a sustainable region SUSTAINABILITY BOND FRAMEWORK - Use of proceeds (II) CLEAN TRANSPORTATION POLLUTION PREVENTION AND CONTROL CIUDADES Y 11 COMUNIDADES SOSTENIBLES 13 ACCION POR EL CLIMA SALUD Y BIENESTAR W SUSTAINABLE WATER AND WASTEWATER MANAGEMENT AGUA LIMPIA Y SANEAMIENTO ENERGY EFFICIENCY SUSTAINABLE MANAGEMENT OF LIVING NATURAL RESOURCES CLIMATE CHANGE ADAPTATION TERRESTRIAL AND AQUATIC BIODIVERSITY CONSERVATION 7 ENERGIA ASEQUIBLE Y NO CONTAMINANTE 15 VIDA DE ECOSISTEMAS TERRESTRES 13 ACCIÓN POR EL CLIMA 13 ACCION POR EL CLIMA 6 AGUA LIMPIA Y SANEAMIENTO 15 VIDA DE ECOSISTEMAS TERRESTRES 30 Nafarroako Gobernua Gobierno de Navarra#31Navarra is a sustainable region SUSTAINABILITY BOND FRAMEWORK - Process Process for project evaluation and selection The process to select and to evaluate potential eligible projects and programmes from the General Budget is performed by an Interdepartmental Commission created by the Government of Navarra. This Committee is composed of a representative of each of the Government departments with the rank of General Director, a representative of the Commission created for the implementation of the 2030 Agenda, the Chief of Staff of the Department of Finance and a technician of the Budget- Directorate-General. Besides, representatives from all the departments of the Government of Navarra may participate in the meetings when the committee requests it due to the need of additional expertise or specific knowledge. The Interdepartmental Commission created by the Government of Navarra will select eligible projects or programmes from the sections of the General Budget that align with the eligibility criteria defined in this Sustainable Finance Framework. As not all activities in the selected budget programmes might be eligible according to the Sustainable Finance Framework, Navarra Government will provide investors with information regarding the percentage of each eligible budget programme that was eligible for each Sustainable Finance issuance. Navarra applies core minimum environmental and social policies and requirements for most of its activities, including those financed with the proceeds of the Sustainable Finance instruments signed under this framework. These requirements are continuously developed and renewed and publicly accessed. 31 Nafarroako Gobernua Gobierno de Navarra#32Navarra is a sustainable region SUSTAINABILITY BOND FRAMEWORK - Process Management of Proceeds The proceeds of any Sustainable Finance instrument signed under this framework will be allocated to eligible budgetary programmes in the General Budget of Navarra, corresponding to the fiscal year of the Sustainable Finance instrument signed. The total expenditures required for the eligible programmes will equal or exceed the net Sustainable Finance instrument proceeds. This will ensure compliance even when eligible programmes or budgets are impacted unexpectedly. The proceeds from any Sustainable Finance instrument will be directly allocated to the eligible projects at settlement or value date. In the event the whole proceeds cannot be allocated at value date, Navarra will temporarily invest the unallocated funds in any form of cash or liquidity position or time deposits with banks, or other forms of available short-term liquid investment in safe that do not involve GHG intensive activities nor controversial activities. This event would be monitored by the Financial Department of Navarra. Navarra has internal systems in place to track proceeds of its Sustainable Finance instruments, and to account for all eligible programmes. Thus, the Committee will monitor and prevent any such double counting in allocation of proceeds. In the case of any selected eligible program becomes ineligible or has been cancelled, Navarra will re-allocate the proceeds of the Sustainability instrument to another eligible programme. 32 Nafarroako Gobernua Gobierno de Navarra#33Navarra is a sustainable region SUSTAINABILITY BOND FRAMEWORK - Reporting Allocation Reporting Allocation reporting will be available to investors within one year from the date of any Sustainable Finance instrument and annually until the proceeds of the Sustainable Finance instrument have been fully allocated. The reporting will produce insights into the total amount provided to the various eligible budgetary programmes and the total of each eligibility category. The allocation reporting will be made available on Navarra's website. Impact Reporting Navarra will provide a dedicated Sustainable Finance impact report for investors within one year from the issuance date and annually until the proceeds have been fully allocated, with estimates of the main environmental or social impacts or outputs of the eligible programmes, where feasible. Some case studies of projects may be provided to illustrate the positive impact. 33 Nafarroako Gobernua Gobierno de Navarra#34Navarra is a sustainable region SUSTAINABILITY BOND EXTERNAL REVIEW SUSTAINALYTICS Second-Party Opinion Navarra Sustainable Finance Government of Navarra Evaluation Summary Sustainalytics is of the opinion that the Navarra Sustainable Finance Framework is credible and impactful, and aligns with the Sustainability Bond Guidelines 2018. This assessment is based on the following: USE OF PROCEEDS The eligible categories for the use of proceeds are aligned with those recognized by both the Green Bond Principles and Social Bond Principles. Sustainalytics considers that projects within the four specified social areas and the eight specified environmental areas to have positive environmental or social impacts and to advance the UN Sustainable Development Goals. PROJECT EVALUTION / SELECTION Navarra has established an Interdepartmental Commission, consisting of representatives from all government departments, to select eligible sections of the General Budget for financing under the Framework. Sustainalytics considers this to be in line with market practice. MANAGEMENT OF PROCEEDS Navarra will use its internal systems to track the proceeds, and intends to allocate funds from each sustainable finance instrument to budgetary programmes within the same fiscal year. Pending allocation, funds will be temporarily invested in any form of cash, liquidity position or time deposits within banks or other forms of available short-term liquid investments. Sustainalytics is of the opinion that this process is in accordance with market practice. REPORTING The government of Navarra commits to providing allocation and impact reporting to investors within one year from the date of any Sustainable Finance instrument and, afterwards, annually until the net proceeds have been fully allocated. Allocation reporting will be provided at the category level, while impact reporting will include quantitative and qualitative outcomes of financed projects. Sustainalytics is of the opinion that this process is in accordance with market practice. SECOND-PARTY OPINION Evaluation date Issuer Location April 12, 2019 Pamplona, Spain Report Sections Introduction. 2 Sustainalytics Opinion. Appendices .3 11 For inquiries, contact the Sustainable Finance Solutions project team: Joshua Zakkai (Amsterdam) Project Manager [email protected] (+31) 20 205 00 79 Zach Margolis (Toronto) Project Lead [email protected] (+1) 647 695 4341 Jean-Claude Berthelot (Amsterdam) Client Relations [email protected] (+31) 20 205 00 15 Sustainalytics Navarra has hired Sustainalytics to provide a Second Party Opinion on Navarra Sustainable Finance Framework. Sustainalytics has reviewed the Sustainable Finance Framework and its alignment with the four pillars of the Green Bond Principles, Social Bond Principles, the Sustainability Bond Guidelines 2018 and the Green Loan Principles. The Second Party Opinion, as well as the Sustainable Finance Framework hereof, will be published and will make available for market information on the website of Navarra. 34 Nafarroako Gobernua Gobierno de Navarra#35Navarra is a sustainable region SUSTAINABILITY BOND EXTERNAL REVIEW Sustainalytics conclusion SUSTAINALYTICS The Region of Navarra has developed the Navarra Sustainable Finance Framework, under which it intends to issue sustainable finance instruments, including but not limited to green, social and sustainability bonds, loans, and other instruments, and use the proceeds to fund investments in a range of environmentally and socially impactful projects and programmes. Specifically, Navarra will identify budget areas that are aligned with the Framework's definition of affordable housing, access to essential services (education and healthcare), socioeconomic advancement, employment generation (including through the potential effect of SME financing and microfinance), renewable energy, clean transportation, pollution prevention and control, sustainable water and waste water management, energy efficiency, environmentally sustainable management of living natural resources and land use, climate adaptation, and terrestrial and aquatic biodiversity conservation. The use of proceeds categories specified in the Framework are aligned with those of the Green Bond Principles 2018 and/or the Social Bond Principles 2018. Navarra has described a process by which proceeds will be tracked, allocated, and managed, and commitments have been made for reporting on the allocation and impact of the use of proceeds. Furthermore, Sustainalytics believes that the investments funded by the sustainable finance transactions will contribute to the advancement of many of the UN Sustainable Development Goals. Based on the above, Sustainalytics is confident that Navarra is well-positioned to issue Green, Social or Sustainability Bonds and other Sustainable Finance Instruments, and that the Navarra Sustainable Finance Framework is robust, transparent, and in alignment with the Sustainability Bond Guidelines 2018. 35 Nafarroako Gobernua Gobierno de Navarra#36NAVARRA IS A STABLE REGION#37Navarra is a stable region FINANCING SYSTEM 37 3172 Navarra has its own tax system, unlike other regions in Spain. Navarra has full authority to manage, levy and collect practically all taxes. Its relation with the Spanish State is governed by the Economic Agreement. Navarra is a supportive region. It collects taxes and contributes to the State and other regions. Nafarroako Gobernua Gobierno de Navarra#38Navarra is a stable region COLLECTION 2018 38 DIRECT TAXES Personal income tax M€ 1,345 Corporation tax Wealth tax Inheritance and gift tax Other direct taxes TOTAL DIRECT TAXES 192 42 58 47 1,684 INDIRECT TAXES Value Added Tax 1,181 Excise duties: 493 Hydrocarbons 223 Manufactured tobacco products 138 Alcohol 48 Electricity 21 Other indirect taxes 158 TOTAL INDIRECT TAXES 1,769 Fees and other revenue TOTAL AGREED TAXES 19 3,483 Source: Government of Navarra. ם Nafarroako Gobernua Gobierno de Navarra#39Navarra is a stable region NAVARRA 2019 BUDGET HEALTH Education Transfers to other Public Administrations Social services and social Source: Government of Navarra. promotion Infrastructure General Services Agriculture, Cattle raising Feeding Pensions Citizen security and penitent iaries Public Debt Culture Access to housing and building promotion Form of empoyment Justice I+D+i Administración Francinay tributaria Alta dirección Polkin exterior Industry Energy 39 Nafarroako Gobernua Gobierno de Navarra#40Navarra is a stable region DEFICIT AND DEBT Public deficit to GDP ratio in 2018 by autonomous communities Canarias País Vasco NAVARRA Galicia Asturias Extremadura Cantabria Madrid TOTAL CC.AA. Castilla y León La Rioja Aragón Castilla-La Mancha Baleares Andalucía Cataluña C. Valenciana Target 2018: -0.4% GDP 0.55% -0.23% Murcia -1,5 -1,0 -0,5 0,0 0,5 1,0 1,5 2,0 2,5 Source: Ministry of Finance and Public Administrations. In 2018 and for the second consecutive year, Navarra again posted a surplus 40 Nafarroako Gobernua Gobierno de Navarra#41Navarra is a stable region DEFICIT AND DEBT Outstanding Debt evolution (€ Mill) 73,5% Navarra's total financial indebtedness decrease to Total debt YOY 4,000 100,0 % 3628 3461 3445 3322 3136 3197 3,000 2847 2446 55,9% 2,000 44,6% 1691 34,5 % 10855,0% 1.000 868 20,5% 47,0 % €3,445 million at the end of 2018, 5% less than the previous year. 16,4% 10,2% 19% 39% 42% 48% -5,0 % 0 -6,0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Bank of Spain. Data published by the Bank of Spain, in accordance with the Excessive Deficit Procedure (EDP). 41 Nafarroako Gobernua Gobierno de Navarra#42Navarra is a stable region DEFICIT AND DEBT Features of debt portfolio 42 100% 80% 47.6% Euros 60% 40% 20% 52.4% Issues .9.6% Floating 100% 100% 90.4% Fixed Long term 0% Instrument Currency Interest rate Term Source: Government of Navarra. Loans are the main debt instrument of Navarra. There is no financing in other currencies, so currency risk is non-existent. Mainly fixed rates, reduce risk and volatility on payments. Nafarroako Gobernua Gobierno de Navarra#43Navarra is a stable region DEFICIT AND DEBT Maturity schedule of General Administration 31/12/2018 (€ Mill) Issues Loans BEI 400 300 200 100 0 Average life: 6 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Source: Government of Navarra. The maturity profile extends out to 2037. The aim is no more than €325 million every year 43 Nafarroako Gobernua Gobierno de Navarra#44Navarra is a stable region DEFICIT AND DEBT Average life and average cost of portfolio 31/12/2018 44 00 8 7.3 7 6.5 6.0 5.8 5,8 6 Average life Average cost 6.1 6.2 6.0 5.5 4.9 4.9 4.6 5 4.4 4.4 4 3.8 3.7 3.7 4 3.5 3.4 2.9 3 2.5 2.2 2.0 2 1 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Government of Navarra. Growing funding needs in the credit crunch scenario led to a reduction of the average life of the debt portfolio. However, since 2013 average life has increased 31%, meanwhile average cost has reduced 47% in the same period. Nafarroako Gobernua Gobierno de Navarra#45Navarra is a stable region DEFICIT AND DEBT Average life and average cost of new operations annually 31/12/2018 14 ■Average life 12.3 11.5 12 Average cost 10.0 9.2 10 9.2 8 6.2 6 4.8 4.4 4.6 3.3 4 1.8 1.6 1.6 1.3 2 0 2012 2013 2014 2015 2016 2017 2018 Source: Government of Navarra. Every year since 2013, with more than nine years of maturity, the average cost of new debt has been reduced constantly. 45 Nafarroako Gobernua Gobierno de Navarra#46Navarra is a stable region DEFICIT AND DEBT Refinancing risk 50% 40% 30% 20% 16.8% 8.8% 10% 24.5% 32.3% 40.6% The degree of concentration of the investment portfolio is reduced, because the payment obligations of the debt are distributed with relative linearity. 5 years 0% 2 years 3 years 4 years 1 year Source: Government of Navarra. 46 Nafarroako Gobernua Gobierno de Navarra#47Navarra is a stable region RATING Navarra's rating is higher than the Spanish Government's and the rest of the regions of the common regime Rating 2019 March NAVARRA Moddy's S&P Fitch Rating Outlook Rating Outlook Rating Outlook A+ Positive PAÍS VASCO ARAGÓN CANTABRIA A3 Stable A+ Positive A- Stable BBB Positive BBB Stable MADRID Baa1 Stable BBB+ Stable BBB Stable GALICIA Baa1 Stable A- Positive CANARIAS A- Positive BBB+ Stable ASTURIAS Baa1 Stable WD EXTREMADURA Baa2 Stable BBB Stable ANDALUCÍA Baa2 Stable BBB+ Stable BBB- Stable CASTILLA-LEÓN Baa1 Stable BALEARES BBB+ Positive CATALU A Ba3 Stable NR BB Stable MURCIA Ba1 Stable BBB- Stable VALENCIA Ba1 Stable BB Positive BBB- Stable CASTILLA LA MANCHA Ba1 Stable BBB- Stable LA RIOJA BBB Stable ESPA A Baa1 Stable A- Positive A- Stable 47 Nafarroako Gobernua Gobierno de Navarra#48Navarra is a stable region RATING S&P analysis •Navarra's high fiscal autonomy and sound finantial management make it more resilent in a stress scenario than Spain. •Navarra does not participate in spain's equalization system for funding regions. •Navarra's economy is wealthier, more competitive and more export-oriented than Spain and competitive industry, focused on internationally diverse markets, which partly mitigates its high concentration on Spain's economy. •Robust revenue growth and cost containment are helping reduce debt while strengthening Navarra's liquidity cushion. S&P has manteined the assessment of Navarre's stand-alone credit profile (SACP) at 'aa-'. The SACP is a meaure of the intrinsic creditworthiness before taking into account any constrained arising from the sovereign rating. 48 Nafarroako Gobernua Gobierno de Navarra#49Navarra is a stable region FUNDING NEEDS 2019/2021 Refinancing needs 400 300 200 100 Refinancing Current deficit 0 2019 2020 2021 Source: Government of Navarra. Commitment to budgetary stability and financial sustainability. Deficit will not exceed 0.1% in 2019. 49 Nafarroako Gobernua Gobierno de Navarra#50Nafarroako Gobernua Gobierno de Navarra