OECD Sovereign Borrowing Outlook 2014

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Each year, the OECD circulates a survey on the borrowing needs of member countries. The responses are incorporated in the OECD Sovereign Borrowing Outlook to provide regular updates of trends and developments associated with sovereign borrowing requirements 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 (e.g. long-term, short-term, nominal, indexed, etc.) and distribution channels.

Accordingly, the OECD Sovereign Borrowing Outlook provides data and information on borrowing needs and funding policies for the OECD area and country groupings, including gross borrowing requirements, net borrowing requirements, central government marketable debt, funding strategies and instruments and distribution channels.



Outlook for sovereign stress

The borrowing environment for governments continues to be shaped by market dynamics punctuated by sudden shifts in investor sentiment and perceptions of risk associated with certain sovereigns. Complications for issuers are generated by the pressures of (perceived) increases in sovereign stress. In extreme cases, this can result in a loss of market access. In several countries, the toxic links between banks and (perceptions about) sovereign creditworthiness also played a role.Interactions between public debt management and monetary policy can be an important channel for changes in long-term rates in government securities markets. Moreover, the political stress surrounding the extension of the US debt ceiling increased uncertainty and created more challenging borrowing conditions.Lack of consensus on how to measure and price “sovereign risk” is a serious obstacle in assessing sovereign asset safety. This complicates assessing alleged structural shortages in the aggregate supply of safe public assets. There is no decisive evidence of a lasting, structural shortage in the aggregate supply of safe sovereign assets.



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