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OECD Sovereign Borrowing Outlook 2019 - Key Findings

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This presentation provides key findings from the 2019 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 at http://www.oecd.org/finance/oecd-sovereign-borrowing-outlook-23060476.htm

Publicada em: Governo e ONGs
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OECD Sovereign Borrowing Outlook 2019 - Key Findings

  1. 1. KEY FINDINGS OECD Sovereign Borrowing Outlook 2019
  2. 2. 2 Outstanding central government debt in the OECD area is double that of pre-crisis levels but lately the growth of debt-to-GDP ratios has slowed • Outstanding government marketable debt over the past decade has doubled from USD 22.5 trillion in 2007 to USD 45.2 trillion in 2018. • Gross borrowings, which peaked at USD 10.9 trillion in 2010 in the wake of the GFC, are set to reach a new record level in 2019 by exceeding USD 11 trillion. • The central government marketable debt-to-GDP ratio in the OECD area jumped by 23 percentage points from 49.5% in 2007 to 72.6% in 2017 but is projected to remain unchanged in 2019 at 72.6%. The impact of post-crisis regulations; unconventional monetary policies; and proliferation of electronic trading venues and strategies underline the importance of understanding your investor base •The last decade was a period of significant shifts in the investor base as well as investor behaviour, partly due to unconventional monetary policies and regulatory changes. •Changes in investor demand have an influence on a wide range of sovereign debt management issues from issuance strategy to transparency and communication practices. •A lower level of involvement of central banks as large buyers should lead to increased funding needs from other investors. •Sovereign issuers would benefit from reinforcing their investor monitoring capabilities, as well as engaging in frequent and consistent dialogue with investors. Summary
  3. 3. 3 The sustained borrowing needs over the past decade doubled the outstanding government marketable debt 0 5 10 15 20 25 30 35 40 45 50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Trillion Central government marketable debt (USD) Cumulative central government marketable NBR (USD) Notes: Using 2007 as base year for cumulative net borrowing requirement (NBR) calculations. Source: 2018 Survey on Central Government Marketable Debt and Borrowing; OECD Economic Outlook No. 104; Refinitiv, national authorities’ websites and OECD calculations. Sovereign debt outlook in OECD countries, 2007-2019
  4. 4. 4 Debt-to-GDP ratio remains elevated, significantly higher than the levels observed prior to GFC 0 10 20 30 40 50 60 70 80 90 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Per cent OECD G7 Euro area - 17 members Emerging OECD Notes: Debt stock without cash. Source: 2018 Survey on Central Government Marketable Debt and Borrowing; OECD Economic Outlook No. 104; Refinitiv, national authorities’ websites and OECD calculations. Central government marketable gross debt in OECD countries, 2007-2019
  5. 5. 5 Interest rate-growth differentials have improved in all G7 countries, but to different degrees. Notes: Debt stock without cash as percentage of GDP, GDP (volume, growth) and average annual yield on 10-year bond. Source: 2018 Survey on Central Government Marketable Debt and Borrowing; OECD Economic Outlook No. 104; Refinitiv, national authorities’ websites and OECD calculations. Debt-to-GDP ratios and interest rate-growth differentials for G7 in 2007 and 2018 Canada France Germany Italy Japan United Kingdom United States 0 20 40 60 80 100 120 140 160 180 200 -3.5 -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 Central government debt, % of GDP Yield on 10 year government bonds minus nominal GDP growth , % pts 2007 2018 l u
  6. 6. 6 Lengthened debt maturities enhance the resilience of the public finances Maturity structure of outstanding central government marketable debt for the OECD area Source: 2018 Survey on Central Government Marketable Debt and Borrowing; Refinitiv, national authorities’ websites and author calculations. 75.0 71.2 72.8 75.4 77.1 77.6 78.7 79.5 79.7 79.8 80.3 80.0 80.7 10.6 10.3 9.6 9.1 9.0 8.7 9.1 9.8 10.4 10.2 10.2 10.2 10.2 14.4 18.5 17.6 15.5 13.9 13.7 12.3 10.7 9.9 9.9 9.5 9.9 9.1 0 10 20 30 40 50 60 70 80 90 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Per cent Long-term (fixed) Long-term (not fixed) Short-term (T-bills)
  7. 7. 7 There will continue to be a strong case for issuing new debt in the short to medium-term Notes: Cumulative percentage of debt maturing in the next 12, 24 and 36 months (i.e. in 2019, 2020 and 2021), as a percentage of total marketable debt stock (without cash) in 2018. Excludes Estonia, Latvia and Luxembourg. Source: 2018 Survey on Central Government Marketable Debt and Borrowing; OECD Economic Outlook No. 104; Refinitiv, national authorities’ websites and OECD calculations. Cumulative percentage of debt maturing in 2019, 2020 and 2021 As a percentage of total marketable debt in 2018 0 5 10 15 20 25 30 35 40 45 OECD G7 Euro area - 17 members Emerging OECD Per cent 2019 2020 2021
  8. 8. 8 Investor demand plays a significant role in issuance strategies and communication strategies Source: 2018 Survey on primary market developments by the OECD Working Party on Debt Management. Influence of the investor base knowledge on issuance strategy 0 5 10 15 20 To a very large extent To a moderate extent To a small extent Not at all Number of countries
  9. 9. 9 On average, 60% of government debt is held domestically, with substantial differences across countries Percentage of bonds held domestically vs. offshore Note: Where it is known, ECB’s holdings from the PSPP is considered as domestic. OECD average is the median average. Source: 2018 Survey on liquidity in secondary government bond markets by the OECD Working Party on Debt Management 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Israel Japan Korea Iceland Switzerland UnitedKingdom Sweden Chile Canada Italy Mexico Portugal Hungary CzechRepublic Denmark UnitedStates OECDaverage Netherlands Spain Poland France SlovakRepublic Australia Belgium Ireland NewZealand Norway Austria Finland Slovenia Germany Greece Latvia Lithuania Domestically held Offshore
  10. 10. 10 Central banks are now significant holders of government debt, as government securities holdings of major central banks add up to USD 11 trillion Government security holdings of selected central banks Note: 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 USD, Trillion US ECB (for Euro 16 members) BoJ BoE
  11. 11. 11 Re-engaging with traditional investors gains importance Note: All OECD area, excluding Australia, Lithuania, and Mexico. Source: OECD National Accounts. Assets under management by traditional investors in the OECD 0 10 20 30 40 50 60 70 80 90 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 USD, Trillion Insurance Corporations Investment funds Pension funds
  12. 12. Final remarks  While the legacy of the financial crisis continues to cast a long shadow over public finances in the form of heavy debt repayments, favourable financing environment over the last decade supported public debt dynamics and limited the debt sustainability concerns  Sovereign issuers need granular and timely investor-base data to be able to better understand changes in the investor base, to make informed decisions on issuance plans and to adapt their investor relations programmes.  Looking ahead, re-engaging with traditional investor base, effective communication strategy with investors and building contingency funding tools will remain a critical element to manage debt management challenges 12
  13. 13. Find us online OECD Sovereign Borrowing Outlook www.oecd.org/finance/oecdsovereignborrowingoutlook.htm www.oecd.org/finance/public-debt/ 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 13

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