- 2226-4132 (en ligne)
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
- Hans J. Blommestein1, Mehmet Emre Elmadag1, Jacob Wellendorph Ejsing
- Author Affiliations
- 1: OECD, France
- 13 sep 2012
- Bibliographic information
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.
- 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