Consolidated debt

The consolidated debt portfolio includes the debts of the consolidated regional entities, most of which are guaranteed by the Region.

The Front Office department has been paying particular attention to the consolidated debt for some years. Rating agencies are placing increasing emphasis on the health of regional entities as the risk profile of regional organisations is added to that of the Region to determine the Region’s financial risks. The management of consolidated financial risks takes into account a “consolidated” portfolio (Region and consolidated entities) which allows a global view to prevent the risk of default.

Goal of the consolidated financial risk management

1. Circumscribe
Circumscribe the extent of the financial risks related to the liabilities of consolidated entities.

2. Assess
Accurately assess regional exposure based on a legal and financial analysis.

3. Prevent
Regularly monitor to prevent the risk of default.

Methodology

The methodology of the consolidated financial risk management consists mainly of a financial analysis and surveys/reviews carried out annually. These surveys and financial analyses provide relatively complete information on the financial health of the entities and thus enable the Front Office to map the consolidated financial risks.

Distinction Consolidated debt – Guaranteed debt:

A consolidated entity is not automatically an entity for which the Region is a guarantor. For an entity to have the guarantee, it must first have a budget rider for the current year. The entity must then make the official application to the debt agency (see chapter on Guaranteed debt for the procedure).

Furthermore, a guaranteed entity is not necessarily a consolidated entity. It is possible for a regional entity to have a guarantee without being consolidated (for example, Vivaqua, SBGE). Unsecured consolidated debt represents approximately 4% of total consolidated debt, while 96% of funded debt is also secured.

INA

The consolidated entities are determined by the Institute for National Accounts. It lists the organisations that are part of sub-sector 13.12. The INA publishes the list of entities in the scope of consolidation in April and September each year.