OECD Sovereign Borrowing Outlook

2306-0476 (online)
2306-0468 (print)
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Each year, the OECD circulates a survey on the borrowing needs of member countries. The responses are included in the OECD Sovereign Borrowing Outlook, an annual publication looking at trends and developments associated with sovereign borrowing requirements and debt levels, from the perspective of public debt managers. The Outlook provides data and information on borrowing needs and funding policies for the OECD area and other country groupings. Its coverage includes gross borrowing requirements, net borrowing requirements, central government marketable debt, funding strategies and instruments and distribution channels.

OECD Sovereign Borrowing Outlook 2017

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26 May 2017
9789264271272 (PDF) ;9789264271258(print)

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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; implications of a low interest environment for government debt; and the outlook of inflation linked bonds.

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  • Foreword
  • Acronyms and abbreviations
  • Editorial
  • Executive summary
  • Sovereign borrowing outlook for OECD countries

    This chapter provides an overview of, and outlook for, sovereign borrowing, deficits and debt in the OECD area for the period 2007-2017. It examines net and gross borrowing needs of OECD governments in the context of fiscal policy challenges and developments. Fiscal policies are shaped by two imperatives: the need to reinvigorate economic growth, including through debt-financed public investment over the short to medium term; and continued pursuit of measured fiscal consolidation over the medium- to long-term. Debt management offices react to these challenges by making redemption profiles somewhat lighter over the short-term.

  • Implications of a low interest rate environment for government debt markets

    A low interest rate environment seems to have become the norm in OECD countries, reflecting a variety of factors. Among them, central banks in major advanced economies lowered policy rates close to zero, or even below, and several also implemented unconventional policy measures in response to the global financial crisis and deteriorating real activity outlook. While volumes of sovereign debt trading at negative yields surged to record levels in 2016, some sovereign debt management offices were (and still are being) paid for issuing their domestic government bonds. The persistent ultra-low interest rate environment has had a number of significant effects on volumes and structures of government debt markets in recent years. Lower interest rates have improved debt dynamics and eased funding of government debt. Declining long-term bond yields – reaching negative territory in several OECD countries – have raised concerns about secondary market liquidity. This chapter discusses the potential challenges arising from the ultra-low interest rate environment for government debt markets, as well as developments regarding the investor base and duration risks.

  • The outlook for inflation-linked bonds

    This chapter provides an overview of inflation-linked sovereign debt which has grown significantly in OECD countries since the early 1980s, with currently USD 3 trillion bonds outstanding. First, it examines the historical trend of sovereign issuance of inflation-linked debt, along with strategic perspectives from investors and policymakers. It then discusses potential implications of changes in market conditions for inflationlinkers, including liquidity premium and potential impacts of relatively lower current break-even inflation rates in several jurisdictions. The principal conclusion of this study is that there is, and will continue to be, an important place for linkers in debt portfolios, as these securities offer advantages for issuers and investors even in a low-yield and lowinflation environment. However, there may be opportunities to innovate at the instrument level to enhance the desirability and liquidity of linkers from the perspective of investors.a

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