OECD Sovereign Borrowing Outlook 2021.

Format:

Book

Author/Creator:

OECD.

OECD, author.

Series:

OECD Sovereign Borrowing Outlook

Language:

English

Subjects (All):

Loans, Foreign.

OECD countries.

Debts, External.

Physical Description:

1 online resource (94 pages)

Place of Publication:

Paris : OECD Publishing, 2021.

Summary:

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.

Contents:

Intro

Foreword

Acknowledgements

Editorial

Abbreviations and acronyms

Executive summary

Government funding needs and debts, which surged dramatically in 2020 as fiscal deficits increased and economies contracted in the wake COVID-19 crisis, will remain high in 2021

Interest rates on government securities have declined to record lows, limiting the debt service burden

Shortened maturities combined with continued large new borrowing needs mean higher rollover ratios and refinancing risk

Prudent debt management will be required as financing needs for debt repayments soar and the outlook for the global economy remains uncertain

1 Sovereign borrowing outlook for OECD countries

1.1. Introduction

1.2. Sovereign borrowing hit a record high in 2020 and is projected to continue rising in 2021

1.3. Key features of sovereign borrowing during the COVID-19 crisis

1.3.1. New debt has been issued at lower costs

1.3.2. Growing number of new maturity lines and new instruments

1.3.3. Heavy reliance on short-term debt issuance

1.3.4. Borrowing operations have been adapted to rapidly changing circumstances

1.4. Sovereign debt ratios reached all-time highs in many countries

1.4.1. Prolonged low interest rates have contained the impact of higher financing needs on government interest expenses

1.4.2. The average maturity of outstanding debt has dropped from the pre-pandemic peaks in most countries

1.5. The outlook calls for a cautious approach to debt management

1.5.1. Rollover ratios as well as auction sizes are rising in many countries

1.5.2. Emergency response capacities

References

Annex 1.A. Methods and sources

Definitions and concepts used in the Sovereign Borrowing Outlook Survey

Coverage of institutions: Central government

Coverage of types of debt: Marketable debt

Terminology.

Regional aggregates

Calculations and data sources

Average term to maturity

Notes

2 Revisiting sovereign refinancing risk in light of COVID-19 crisis

2.1. Introduction

2.2. Sovereign refinancing risk

2.2.1. Assessment of sovereign refinancing risk

2.3. Impact of the epidemic on sovereign refinancing needs in the OECD area

2.4. Measuring refinancing risk through key indicators

2.4.1. Key indicators

Average Time to Maturity (ATM)

Rollover Ratio (ROR 1Y)

Rollover Ratio (ROR 3Y)

2.4.2. Limitations of indicators

2.5. Means of managing refinancing risk

2.5.1. Benchmark redemption profile of a theoretical model

2.5.2. Strategic design of funding strategies with refinancing risk considerations

2.5.3. Bond switches and buybacks

2.5.4. Building flexibility in case of market disruption

Liquidity buffer practice:

Diversification in source of funding:

Establishing credit lines:

Access to liquid money markets:

Role of transparency and communication in times of stress:

3 The impact of the COVID-19 crisis on emerging market borrowing

3.1. Introduction

3.2. The pandemic has weighed greatly on emerging market sovereign issuers

3.2.1. Funding conditions have improved, but vulnerability to global risk sentiment remains high

3.2.2. Debt issuance has picked up, though remained lower than historical averages in some regions

Emerging Asia remained the largest regional issuer, while many other regions lagged behind historical averages

Upper-middle-income countries maintained an upward trend despite the pandemic, thanks to accommodative monetary policies

3.3. Currency and maturity structure varied widely among country groups

3.3.1. T-Bill issuance by non-investment grade issuers has increased.

3.3.2. The pandemic is spurring the issuance of new instruments

3.3.3. Domestic currency securities continue to dominate EM issuance, while some issuers faced challenges in regaining access to international markets

3.3.4. USD remained the most popular foreign currency of debt issuance

3.4. Increased financing and shorter maturities amplified medium-term refinancing needs

3.4.1. Emerging market issuers should be vigilant amid continued global uncertainty

Annex 3.A. Methods and sources

Primary sovereign bond market data and country groupings

Credit ratings data

Annex A. OECD 2020 Survey on Primary Markets Developments

Annex A is available ONLINE ONLY at the following DOI: https://doi.org/10.1787/48828791-en

List of tables in Annex A

Annex B. OECD 2020 Survey on Liquidity in Government Bond Secondary Markets

Annex B is available ONLINE ONLY at the following DOI: https://doi.org/10.1787/48828791-en

List of tables in Annex B

Annex B. OECD 2020 Survey on Liquidity in Government Bond Secondary Markets.

Notes:

Description based on publisher supplied metadata and other sources.

ISBN:

92-64-85239-5

92-64-69182-0

OCLC:

1289370827