OECD Working Papers on Sovereign Borrowing and Public Debt Management

ISSN :
2226-4132 (en ligne)
DOI :
10.1787/22264132
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OECD Working Papers on Sovereign Borrowing and Public Debt Management provide authoritative information on technical and policy issues in the area of public debt management (PDM) and government securities markets. Studies track closely structural issues, trends and challenges in government debt policies and markets. Topics include pressing government debt policy issues such as the measurement of sovereign risk; how to contain the cost of government borrowing operations; the use of electronic systems; sovereign asset and liability management (SALM); liquidity of markets in government debt; advances in risk management; the role of derivatives in PDM; linkages between PDM and monetary policy and the role of debt managers in pricing and managing contingent liabilities.

These studies are prepared for dissemination among sovereign debt managers, financial policy makers, regulators, financial market participants, rating agencies, and academics. By providing information on this highly specialised field of government activity and policy, papers aim to stimulate discussions among a wider audience as well as further analysis.

 

Buyback and Exchange Operations

Policies, Procedures and Practices among OECD Public Debt Managers You or your institution have access to this content

Auteur(s):
Hans J. Blommestein, Mehmet Emre Elmadag1, Jacob Wellendorph Ejsing
Author Affiliations
  • 1: OCDE, France

Date de publication
13 sep 2012
Bibliographic information
N°:
5
Pages
45
DOI
10.1787/5k92v18rh80v-en

Cacher / Voir l'abstract

This paper reports on a survey carried out among OECD government debt managers on the use of bond buybacks and exchange operations. The survey shows that government debt managers use extensively bond buybacks and exchanges (often referred to as "switches") as liability management tools.

Bond exchanges and buyback operations serve two main purposes. First, by reducing the outstanding amounts of bonds close to maturity, exchanges and buybacks help in reducing roll-over peaks and thus lowering refinancing risk. Second, exchanges and buybacks allow debt managers to increase the issuance of on-the-run securities above and beyond what would otherwise have been possible. The resulting more rapid build-up of new bonds enhances market liquidity of these securities. This in turn should eventually be reflected in higher bond prices. Hence, bond exchanges and buybacks are aimed at lowering refinancing risk. In addition these operations may also contribute to lower funding costs for governments.

Mots-clés:
debt buybacks, exchange operations, sovereign debt management, liability management, switches
Classification JEL:
  • G28: Financial Economics / Financial Institutions and Services / Government Policy and Regulation
  • H63: Public Economics / National Budget, Deficit, and Debt / Debt; Debt Management; Sovereign Debt