OECD Sovereign Borrowing Outlook 2014

image of OECD Sovereign Borrowing Outlook 2014

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.



The pros and cons of direct bidding

This chapter summarises OECD members’ responses to the OECD survey on the direct bidding in auction systems. Bidders in sovereign debt auctions typically fall into one of three categories: Primary Dealers or authorised dealers, dealer clients or indirect bidders, and direct bidders. In particular, direct bidders include both large institutional bidders who submit competitive bids and smaller retail investors who submit non-competitive bids.The Borrowing Outlook investigates the participation of primary dealers and large institutional direct bidders under different auction mechanics, based on the responses from 22 OECD debt managers.The survey results are analysed from multiple perspectives.The prevalence of direct bidding under different auction formats.Potential benefits and disadvantages of allowing direct bidding in the auction process.Potential risks imposed by direct bidders.Impact of direct bidding on the bidding behaviour of other investors (mainly Primary Dealers), risk transfer costs, auction results, and secondary market liquidity.


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