This presentation provides key findings from the 2018 edition of the OECD Sovereign Borrowing Outlook. This includes gross borrowing requirements, net borrowing requirements, central government marketable debt, funding strategies and instruments and distribution channels.
Find out more information at http://www.oecd.org/finance/oecdsovereignborrowingoutlook.htm
2. 2
Key findings
The central government marketable debt-to-GDP ratio is expected to decline
slightly in 2018, while elevated debt service ratios pose a significant challenge
• The aggregate central government marketable debt will gradually increase from
USD 43.6 trillion in 2017 to USD 45 trillion in 2018.
• The central government marketable debt-to-GDP ratio, which surged from 49.5%
to 74% between 2007 and 2016, is projected to decline to 73% in 2018, reflecting
expectations for higher economic growth.
• The high level of debt servicing, combined with large net borrowing needs, has
generated challenging debt service ratios.
Funding conditions have been favourable and funding strategies have leaned
towards long-term bonds in recent years
• Prolonged low interest rates have facilitated the financing of budget deficits and the
re-financing of existing debt. Furthermore, interest rate-growth differential has
been favourable in several OECD countries.
• Large central banks and public funds have become major holders of sovereign debt
in major OECD countries.
• Sovereign funding strategies have leaned steadily towards long-term financing
instruments. The average term-to-maturity ratios have increased to unprecedented
levels in recent years.
• Credit quality of sovereign bond issuance, notably in G7 countries, has been
declining over the past decade due to deteriorated sovereign credit ratings.
For the OECD area as a whole:
3. 3
The pace of debt accumulation has alleviated as a result
of stabilised gross borrowing needs
Notes: GBR = gross borrowing requirement, NBR = net borrowing requirement.
Source: 2017 Survey on Central Government Marketable Debt and Borrowing carried out by the OECD
Working Party on Debt Management; OECD Economic Outlook No. 102; IMF World Economic Outlook
(October 2017); Thomson Reuters, national authorities’ websites and OECD calculations.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0
5
10
15
20
25
30
35
40
45
50
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
TrillionTrillion
Central government marketable GBR (USD, LHS) Central government marketable debt (USD, LHS)
Central government marketable NBR (USD, RHS) General government deficit (USD, RHS)
4. 4
The central government marketable debt-to-GDP ratio
Notes: As a percentage of GDP. Central government marketable gross debt.
Source: 2017 Survey on Central Government Marketable Debt and Borrowing carried out by the OECD Working
Party on Debt Management; OECD Economic Outlook No. 102; IMF World Economic Outlook (October 2017);
Thomson Reuters, national authorities’ websites and author calculations.
Sovereign debt burdens remain at high levels, though
debt-to-GDP ratio is projected to decline slightly in 2018
0
10
20
30
40
50
60
70
80
90
100
OECD G7 Euro area - 16 members Emerging OECD
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
5. 5
Around 40% of the outstanding marketable debt has to
be re-financed over the next three years
Cumulative percentage of debt maturing in the next 12, 24 and 36 months
(As a percentage of total marketable debt as of 2017)
Source: 2017 Survey on Central Government Marketable Debt and Borrowing carried out by the OECD
Working Party on Debt Management; OECD Economic Outlook No. 102; IMF World Economic Outlook
(October 2017); Thomson Reuters, national authorities’ websites and OECD calculations.
0
5
10
15
20
25
30
35
40
45
OECD G7 Euro area - 16 members Emerging OECD
2018 2019 2020
6. 6
A closer look at the changes in marketable debt-to-GDP
ratios reveals significant differences among countries
Notes: Percentage point changes.
Source: 2017 Survey on central government marketable debt and borrowing by the OECD Working
Party on Debt Management; OECD Economic Outlook No 102.
60 40 20 0 20 40 60
United States
United Kingdom
Turkey
Switzerland
Sweden
Spain
Slovenia
Slovak Republic
Portugal
Poland
Norway
New Zealand
Netherlands
Mexico
Luxembourg
Latvia
Korea
Japan
Italy
Israel
Ireland
Iceland
Hungary
Germany
France
Finland
Denmark
Czech Republic
Chile
Canada
Belgium
Austria
Australia
2007 – 2012 ¦ 2012 – 2017
Deterioration
Improvement
7. 7
The long era of low interest rates has created a
buoyant funding environment
-5
0
5
10
15
20
25
Range 25th percentile 75th percentile Median
-5
-5
0
5
-2
-1
0
-5
0
5
10
15
20
25
5-year benchmark government bond yield
-2
-1
0
1
2
3
4
15
20
25
10-year benchmark government bond yield
3
4
5
Notes: Interest rates in percentages. Charts show the evolution of several metrics (minimum, maximum, 25th
percentile, 75th percentile, median) of 3-year, 5-year and 10-year benchmark government bond yields, calculated for
the following group of countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hungary,
Ireland, Italy, Japan, Netherlands, New Zealand (5-year and 10-year yields only), Norway (5-year and 10-year yields
only), Poland, Portugal, Spain, Sweden (5-year and 10-year yields only), Switzerland, United Kingdom and the United
States. The grey area shows the range of minimum and maximum values among all the included countries.
Source: Thomson Reuters and author calculations.
8. 8
Average maturity of outstanding OECD government
marketable debt rose to 8 years in 2017
Notes: Average term-to-maturity in years (e.g. 0.5 years correspond to 6 months) of outstanding marketable debt.
Source: Surveys on central government marketable debt and borrowing carried out by the OECD Working Party on
Debt Management; debt management offices and national authorities’ websites and OECD calculations.
9. 9
Central banks’ holdings of domestic government
bonds have risen to unprecedented levels
Notes: Values have been aggregated by using fixed exchange rates, as of 1st December 2009.
Source: ECB, central banks of Japan, United Kingdom and the United States.
0
2
4
6
8
10
12
Trillions
Japan ECB (for Euro 16 members) United States United Kingdom
11. • Market conditions have been favourable over much of
the period, generally with low interest rates and low
volatility
• Looking forward, an important source of uncertainty is
associated with timing and pace of eventual monetary
policy normalisation
• Overall, while downside risks in the short-term are
limited given extended debt maturity profiles and
strong growth outlooks, refinancing risks in sovereign
debt may pose significant challenges in the long term
if market conditions deteriorate.
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Looking ahead, the favourable financing conditions may
not be a permanent feature of the financial markets
12. OECD Sovereign Borrowing Outlook
www.oecd.org/finance/oecdsovereignborrowingoutlook.htm
www.oecd.org/daf/publicdebtmanagement
Contact list
Fatos Koc, Head of Bond Market and Public Debt Management Unit,
OECD, Paris, France fatos.koc@oecd.org
Gary Mills, Statistician, Bond Market and Public Debt Management
Unit, OECD, Paris, France gary.mills@oecd.org
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