OECD Sovereign Borrowing Outlook 2021
This edition of the OECD Sovereign Borrowing Outlook reviews developments in response to the COVID-19 pandemic for government borrowing needs, funding conditions and funding strategies in the OECD area. It discusses the implications of the COVID-19 crisis on sovereign refinancing risk, and how to identify, measure and mitigate refinancing risk in light of country experiences. It then examines debt issuance trends for government securities in emerging market and developing economies in recent years, and presents novel insights on the impact of the COVID-19 pandemic on issuance conditions in these economies.
The impact of the COVID-19 crisis on emerging market borrowing
In the global fight against the COVID-19 pandemic and its detrimental social and economic impact, governments have launched various measures since March 2020. This, combined with reduced tax revenues, has resulted in an upsurge in sovereign borrowing needs globally. While most advanced economies have been experiencing ultra-low interest rates and strong demand for public debt, a number of underlying vulnerabilities have made borrowing conditions more difficult for many developing and emerging market economies.The pandemic greatly complicated the ability of developing and emerging market sovereign issuers’ to access to the markets in 2020, in particular at the initial stages of the crisis. The global risk-off environment resulted in sharp reversal of capital flows, which had a particularly profound impact on market access of non-investment grade issuers. This chapter presents an overview of debt issuance trends in developing and emerging market economies, and assesses the impact of the COVID-19 crisis on issuance conditions.
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