OECD Sovereign Borrowing Outlook 2019

✍ Scribed by OECD

• Publisher: OECD
• Year: 2019
• Tongue: English
• Leaves: 94
• Category: Library

✦ Synopsis

The OECD Sovereign Borrowing Outlook provides regular updates on trends and developments associated with sovereign borrowing requirements, funding strategies, market infrastructure and debt levels from the perspective of public debt managers. The Outlook makes a policy distinction between funding strategy and borrowing requirements. The central government marketable gross borrowing needs, or requirements, are calculated on the basis of budget deficits and redemptions. The funding strategy entails decisions on how borrowing needs are going to be financed using different instruments and which distribution channels are being used. This edition provides data, information and background on sovereign borrowing needs and discusses funding strategies and debt management policies for the OECD area and country groupings. In particular, it examines: gross borrowing requirements; net borrowing requirements; central government marketable debt; interactions between fiscal policy, public debt management and monetary policy; funding strategies, procedures and instruments; liquidity in secondary markets; and changes in the investor base.

✦ Table of Contents

Foreword
Acknowledgements
Editorial
The outlook for sovereign debt is diverse across OECD countries
Understanding the investor landscape is critical
A role for sovereigns in catalysing sustainable finance
Strategies from the European sovereign debt crisis remain valid today
Abbreviations and acronyms
Executive summary
Outstanding central government debt in the OECD area is double that of pre-crisis levels
The favourable differential between cost of debt and growth rates means that the growth of debt-to-GDP ratios has slowed
The impact of interest rate changes on the cost of sovereign debt depends on several factors
A deterioration in the market liquidity of government securities has led sovereign debt managers to adapt their practices
Chapter 1. Sovereign borrowing outlook for OECD countries
1.1. Introduction
Key findings
1.2. An upward movement in nominal government borrowing needs
1.3. Sovereign debt accumulation varied widely across countries in the OECD area
1.4. The favourable interest-growth differential
1.5. Composition of financing remains tilted towards long-term fixed-rate securities
The share of index-linked issuance has moderated somewhat
Sovereign green bond issuance has been gaining momentum in Europe
1.6. Achieving resilience to potential future shocks
1.7. Implications of monetary policy developments for debt dynamics and government securities markets
1.8. Concerns over secondary market liquidity of government securities have been somewhat eased
Notes
References
Annex 1.A. Methods and sources
Regional aggregates
Calculations, definitions and data sources
Chapter 2. Understanding investor demand for government securities
2.1. Introduction
Key findings
2.2. Relevance of investor base for sovereign debt management
2.3. Access to investor base information
2.4. Current and potential changes in investor base
Greater role of domestic central banks in government bond markets
Changes in foreign investor demand: Tracking the details
Factors affecting demand from pension funds and insurance companies
2.5. Implications of changes in investor demand for issuance strategies
2.6. Considerations of investor relations and communication practices
Notes
References
Chapter 3. Public debt management under stressed market conditions: A review of the recent experiences of Greece, Iceland, Ireland and Portugal
3.1. Introduction
Key findings
3.2. Dealing with public debt management under stressed market conditions
3.3. Greece
Economy and public debt dynamics in the run-up to the crisis
Financial support programmes and restructuring of public debt
Mobilizing cash reserves and adoption of buffer policy
Steps taken to improve structure of public debt
Measures presented within the EU/IMF financial support programme
Return to bond markets
Current environment
3.4. Iceland
Economy and public debt dynamics in the run-up to the crisis
Introduction of capital controls and recapitalization of the banking system
Re-establishing international market access
Implications of the crisis for public debt management framework
Organizational changes in debt management
Enhancing transparency and predictability
Building up a liquidity buffer
Use of liability management exercises
An enhanced risk management framework for contingent liabilities
Current environment
3.5. Ireland
Economy and public debt dynamics in the run-up to the crisis
A phased approach to regain market access
Preparatory Work
Re-entry phase
Full market access
Current market environment
3.6. Portugal
Economy and public debt dynamics in the run-up to the crisis
Reactions to the challenges in debt management between 2012 -2013
Implementation the EU-IMF programme
Re-engaging with the investor base
Addressing refinancing risk
Exit from the EU-IMF Programme
Restoring full market access
Medium and long-term policy responses
Lessons learned from the debt crisis
Notes
References
Annex A. OECD 2018 Survey on Primary Markets Developments
Annex B. OECD 2018 Survey on Liquidity in Government Bond Secondary Markets
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