OECD sovereign borrowing outlook 2013.

Format:

Book

Government document

Contributor:

Organisation for Economic Co-operation and Development.

Language:

English

Subjects (All):

Debts, Public--OECD countries.

Debts, Public.

Debts, External--OECD countries.

Debts, External.

Loans, Foreign--OECD countries.

Loans, Foreign.

Physical Description:

145 p. : ill.

Edition:

1st ed.

Place of Publication:

Paris : OECD, c2013.

Language Note:

English

Summary:

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.

Contents:

Intro

Foreword

Table of contents

Acronyms

Executive summary

Chapter 1. Sovereign borrowing overview

1.1. A highly uncertain issuance environment with low levels of confidence but mixed signals on volatility

Figure 1.1. Fiscal and borrowing outlook in OECD countries for the period 2007-2013

Table 1.1. Central government gross borrowing and debt in the OECD area

OECD debt managers continue to face major funding challenges

Borrowing needs versus funding strategy

Uncertainty increased due to lower pace of recovery and higher sovereign stress

1.2. Evolution of budget deficits, sovereign borrowing and debt

Net borrowing requirements are estimated to fall in 2013

Overall government debt ratios to increase further

The OECD average long-term interest rate is expected to rise in 2013

Figure 1.2. Central government gross borrowing, interest payments and long-term interest rates

1.3. Summary overview of the borrowing outlook for OECD country groupings

All OECD country groupings show an improvement in government balances

Figure 1.3. General government financial balance to GDP ratios in OECD countries

Gross borrowing remains elevated but net borrowing is projected to decrease in 2013

Figure 1.4. Central government marketable gross borrowing in OECD countries

1.4. The challenge of raising large volumes of funds with acceptable roll-over risk

Mood swings are amplified by rating changes

Challenging redemption profiles in 2012 and 2013

Figure 1.5. Medium- and long-term redemptions of central government debt in OECD countries

Figure 1.6. Percentage of debt maturing in next 12, 24 and 36 months

Challenge in raising funds at low cost with acceptable roll-over risk has increased

Average maturity common indicator for rollover risk

Figure 1.7. Average term to maturity.

Debt managers aim to rebalance towards long-term instruments

Figure 1.8. Maturity structure of gross-borrowing needs for OECD area

1.5. Funding strategy during periods of fiscal dominance and fiscal consolidation

Table 1.2. Funding strategy based on marketable gross borrowing needs in OECD area

1.6. Central government debt at a glance

Figure 1.9. Gross public debt of selected advanced economies: 1880-2012

Figure 1.10. Central government marketable debt in OECD countries

Projected increase in central government debt ratios in 2013

Figure 1.11. Maturity structure of central government marketable debt for OECD area

Notes

References

Chapter 2. Outlook for sovereign stress

2.1. Concerns about sovereign stress continue to create major challenges for government borrowing operations

Figure 2.1. OECD General government gross debt and deficits, 2011

Figure 2.2. OECD General government gross debt and deficits, 2012

2.2. Safe assets, the risk-free rate and sovereign risk

2.2.1. What is a safe asset?

2.2.2. Empirical proxies for the risk-free rate

2.2.3. How to define sovereign risk?

2.2.4. How to measure sovereign risk?

2.3. Mispricing of sovereign risk?

Figure 2.3. Euro area 10-year government bond yield and spread to Bund (1999­2012)

Figure 2.4. Historical volatility of 10-year benchmark yields (2008-2012)

Figure 2.5. Historical volatility of 10-year benchmark yields, 2007-2012

2.4. European sovereign debt markets under stress

2.4.1. Developments in 2011 and 2012

Figure 2.6. Ten-year benchmark bond yields (core countries)

Figure 2.7. Ten-year benchmark bond yields (peripheral countries)

2.4.2. Sovereign debt restructuring in Greece

Figure 2.8. Greece 10-year benchmark bond spread and volatility in euro area 10­year yield spreads

2.4.3. From EFSF to ESM.

Table 2.1. EFSF commitments for Ireland, Portugal, Greece and Spain

Figure 2.9. ESM capital structure and effective lending capacity

Figure 2.10. Spanish 10-year benchmark bond yields and non-resident holdings

Figure 2.11. Italian 10-year bond yields and non-resident holdings

Figure 2.12. Italian and Spanish yield curves

Figure 2.13. Average maturity of sovereign debt in Italy and Spain (in years)

Figure 2.14. Redemption profile of Italian and Spanish long-term sovereign debt

2.5. Demand for and supply of safe sovereign assets

Figure 2.15. Changes in credit ratings and yields

Figure 2.16. Gross borrowing in OECD countries by rating category

Figure 2.17. Structure of gross borrowing by rating category

Figure 2.18. 10-year benchmark bond yields and credit events for selected OECD sovereigns

Figure 2.19. OECD gross borrowing by rating

Figure 2.20. OECD funding structure of triple-A and double-A sovereigns

2.6. Destabilising dynamics of government securities markets: Fundamentals versus mood shifts?

Figure 2.21. General government fiscal balance and sovereign debt

Chapter 3. Debt management in the macro spotlight

3.1. Complex interactions between sovereign debt management, fiscal policy and monetary policy under fiscal dominance and financial instability1

3.1.1. The blurring of lines between public debt management, monetary policy and fiscal policy

3.1.2. Rethinking public debt management

3.2. Challenges of unconventional monetary policy for public debt management

3.2.1. Unconventional monetary policy measures and the impact on government securities markets

Figure 3.1. Central bank balance sheets

Figure 3.2. Main linkages between macroeconomic conditions, the banking sector and government bond markets.

Figure 3.3. US Federal Reserve purchase of total net Treasury issuance

Figure 3.4. US Treasury securities held by the Federal Reserve

3.2.2. Possible conflicts between unconventional monetary policy, sovereign issuance and proper functioning of government securities market

Figure 3.5. Primary dealer net outright position in government coupon securities

3.2.3. What are the challenges of the exit from accommodative asset purchase programmes for PDM?

3.3. Debt management considerations during periods of fiscal dominance and fiscal consolidation

3.3.1. Fiscal dominance and PDM

3.3.2. Fiscal consolidation and PDM

Figure 3.6. Evolution of deficits, gross borrowing and debt in OECD country groupings

Figure 3.7. Average term to maturity in OECD country groupings

Chapter 4. Challenges in primary markets

4.1. Changes in issuance procedures, techniques and instruments

4.1.1. The need to adjust issuance procedures and techniques in different groups of countries

4.1.2. Results from an OECD survey on the current use of issuance procedures and policies

Table 4.1. The use of syndication by OECD DMOs

Table 4.2. Overview of issuing procedures in the OECD

Table 4.3. Introduction or announcement of new types of funding instruments

Table 4.4. Overview of changes in issuing procedures and techniques in OECD countries

4.1.3. Responses by DMOs to tougher issuance conditions

Figure 4.1. Issuance of linkers and variable rate instruments in the OECD area

4.1.4. Loss of market access and return to (international) longer-term markets

Figure 4.2. Loss of market access and return to long-term markets

Figure 4.3. The effect of the January 2012 switch operation on the Irish redemption profile

Figure 4.4. 2011-2012 Portugal Treasury note programme.

Figure 4.5. The effect of the October 2012 switch operation on the Portuguese redemption profile

4.2. Primary dealer models under stress?

4.2.1. OECD survey results on the "Functioning and Future of Primary Dealer Systems in OECD Countries"

4.2.2. Functioning of PD systems in primary markets

Table 4.5. What kind of measures did you introduce to improve the functioning of PD systems in your primary market?

Table 4.6. Increase in the size of existing non-competitive subscriptions

4.2.3. Functioning of PD systems in secondary market

Table 4.7. What kind of measures did you introduce to improve the functioning of PD systems in your secondary market?

4.2.4. Potential impact of forthcoming regulations and the future of primary dealer systems15

Table 4.8. Regulations that would have the biggest potential impact on PD models

Table 4.9. Are conventional or existing PD-models under threat?

Chapter 5. Structural changes in the investor base for government securities

5.1. Why is the investor base changing?

Table 5.1. Structural changes in the composition of the investor base for OECD government securities

5.2. Higher degree of home bias?

Figure 5.1. Non-resident holdings of government securities (2007 vs. 2012)

Figure 5.2. Non-resident holdings of government securities in Ireland, Italy, Spain, and France

5.3. How important is the role of central banks as investor?

Figure 5.3. Major central banks' non-standard monetary policy programmes

Figure 5.4. Government security holdings of US and UK central banks

5.4. Asset allocations of foreign exchange reserves and impact on government debt markets

Figure 5.5. Foreign central banks' holdings of US Treasury debt

5.5. Conclusions

Chapter 6. Buybacks and exchanges.

6.1. Introduction on buyback and exchange operations.

Notes:

Bibliographic Level Mode of Issuance: Monograph

Includes bibliographical references.

Description based on publisher supplied metadata and other sources.

ISBN:

9789264189195

926418919X

OCLC:

922904595