Template-type: ReDIF-Paper 1.0 Author-Name: OECD Title: Regulatory Reform of OTC Derivatives and Its Implications for Sovereign Debt Management Practices Abstract: This report analyses the possible implications for public debt management practices arising from regulatory changes for over the counter derivatives (OTCD) that are being developed worldwide to strengthen the resiliency of the financial system. Many OECD sovereigns use OTCD in their debt management activities (mainly interest rate swaps and cross-currency swaps). Some of the regulatory initiatives for OTCD markets may lead to changes in sovereign and dealer practices. Potential changes include modifications to collateralization requirements, the use of central clearing for OTCD trades, and increased pre- and post-trade reporting. Issues around sovereign exemptions and the transition of existing OTCD portfolios may also require attention from sovereign debt managers... Classification-JEL: G15; G18; H63 Keywords: debt management, general financial markets, government policy and regulation, international financial markets, sovereign debt Creation-Date: 2011-09-30 Number: 1 Handle: RePEc:oec:dafaaf:1-EN Template-type: ReDIF-Paper 1.0 Author-Name: OECD Title: Principles and Trade-Offs when Making Issuance Choices in the UK Abstract: This paper sets out: (i) the principles underpinning debt management policy in the UK; (ii) the key factors influencing annual issuance decisions; and (iii) how some of those factors require judgements to be made in determining appropriate trade-offs. Key factors influencing annual issuance decisions are determined in accordance with the debt management objective. As part of this assessment the UK Government undertakes an analysis of the demand conditions in the gilt market and implications for the cost of issuance. Other factors such as market management and portfolio diversification considerations are also taken into account as well as practical and operational issues associated with any issuance strategy... Classification-JEL: E43; G18; H63 Keywords: Annual issuance program, debt management principles, liquidity, portfolio diversification, risk management, trade-offs and issuance choices, yield curve Creation-Date: 2011-09-30 Number: 2 Handle: RePEc:oec:dafaaf:2-EN Template-type: ReDIF-Paper 1.0 Author-Name: Hans J. Blommestein Author-Workplace-Name: OECD Author-Name: Philip Turner Author-Workplace-Name: Bank for International Settlements Title: Interactions Between Sovereign Debt Management and Monetary Policy Under Fiscal Dominance and Financial Instability Abstract: This paper argues that serious fiscal vulnerabilities arising from many years of high government debt will create new and complex interactions between public debt management (PDM) and monetary policy (MP). The paper notes that, although their formal mandates have not changed, recent balance sheet policies of many Central Banks (CBs) have tended to blur the separation of their policies from fiscal policy (FP). The mandates of debt management offices (DMOs) have usually had a microeconomic focus (viz, keeping government debt markets liquid, limiting refunding risks etc). Such mandates have usually eschewed any macroeconomic policy dimension. For these reasons, all clashes in policy mandate between CBs and DMOs have been latent and not overt. Classification-JEL: E52; E58; E61; H63 Keywords: central banks and their policies, debt, debt management, monetary policy, policy coordination, policy designs and consistency, policy objectives, sovereign debt Creation-Date: 2012-02-20 Number: 3 Handle: RePEc:oec:dafaaf:3-EN Template-type: ReDIF-Paper 1.0 Author-Name: Hans J. Blommestein Author-Workplace-Name: OECD Author-Name: Anja Hubig Author-Workplace-Name: Humboldt University of Berlin Title: A Critical Analysis of the Technical Assumptions of the Standard Micro Portfolio Approach to Sovereign Debt Management Abstract: This paper examines the analytical underpinnings of the standard micro portfolio approach to public debt management (PDM) that aims at minimising longer-term cash-flow based borrowing costs at an acceptable level of risk. The study concludes that two technical key assumptions need to hold for the standard micro portfolio approach to yield optimal (i.e. cost-minimising) results. We argue that these assumptions do not hold in the current borrowing environment characterized by fiscal dominance with complex links between PDM and monetary policy (MP). By using the principles of portfolio theory we demonstrate that in this borrowing environment, cost-risk optimality requires the use of a broader cost concept than employed in the standard micro portfolio approach. This new concept (referred to as effective borrowing costs) incorporates not only the cash flows of the debt portfolio itself, but also those related to primary borrowing requirements. The resulting broader cost measure includes therefore the interactions with the budget. Finally, the paper demonstrates that the standard cost-risk framework of the micro portfolio approach is nested within this new, broader cost concept. Classification-JEL: E52; E58; E62; H63 Keywords: central banks, fiscal policy, government borrowing, monetary policy, public debt management, sovereign debt, sovereign risk Creation-Date: 2012-02-20 Number: 4 Handle: RePEc:oec:dafaaf:4-EN Template-type: ReDIF-Paper 1.0 Author-Name: Hans J. Blommestein Author-Workplace-Name: OECD Author-Name: Mehmet Emre Elmadag Author-Workplace-Name: OECD Author-Name: Jacob Wellendorph Ejsing Title: Buyback and Exchange Operations: Policies, Procedures and Practices among OECD Public Debt Managers Abstract: This paper reports on a survey carried out among OECD government debt managers on the use of bond buybacks and exchange operations. The survey shows that government debt managers use extensively bond buybacks and exchanges (often referred to as "switches") as liability management tools.Bond exchanges and buyback operations serve two main purposes. First, by reducing the outstanding amounts of bonds close to maturity, exchanges and buybacks help in reducing roll-over peaks and thus lowering refinancing risk. Second, exchanges and buybacks allow debt managers to increase the issuance of on-the-run securities above and beyond what would otherwise have been possible. The resulting more rapid build-up of new bonds enhances market liquidity of these securities. This in turn should eventually be reflected in higher bond prices. Hence, bond exchanges and buybacks are aimed at lowering refinancing risk. In addition these operations may also contribute to lower funding costs for governments. Classification-JEL: G28; H63 Keywords: debt buybacks, exchange operations, liability management, sovereign debt management, switches Creation-Date: 2012-09-13 Number: 5 Handle: RePEc:oec:dafaaf:5-EN Template-type: ReDIF-Paper 1.0 Author-Name: Mark Dooner Author-Workplace-Name: Bank of Canada Author-Name: David McAlister Author-Workplace-Name: Government of Canada Title: Investor Relations and Communications: An Overview of Leading Practices in the OECD Area Abstract: This paper summarizes and discusses results from a survey conducted by the Department of Finance Canada and the Bank of Canada in July 2012 regarding an overview of investor relations (IR) and communications practices of members of the OECD Working Party on Debt Management (WPDM). The survey contained both quantitative and qualitative questions pertaining to IR, grouped into three themes: Definition and Development; Communications Strategy and Relationship Management; and Governance and Sustainability. Survey responses from 26 countries were collected and analyzed under these themes. While the extent of formalization and governance varies, all respondents with outstanding debt indicated that they perform IR activities; comments received suggest a general expansion of IR activities as the function evolves, both as a best practice and for directed, strategic purposes. Responses were collected regarding the most useful IR activities and communication methods conducted by countries, key stakeholder relationships relative to the IR function, and key challenges that include the difficulty in measuring the value of IR, particularly under changing circumstances. Despite the challenges, on-going IR is viewed as an important and effective component of the overall debt management function. Classification-JEL: G23; H6; M30 Keywords: sovereign debt management Creation-Date: 2013-01-17 Number: 6 Handle: RePEc:oec:dafaaf:6-EN Template-type: ReDIF-Paper 1.0 Author-Name: James Knight Author-Workplace-Name: UK Debt Management Office Title: Assessing the Cost Effectiveness of Index-linked Bond Issuance: A Methodological Approach, Illustrated Using UK Examples Abstract: Sovereign index-linked bond issuance has grown significantly since the early 1980s, with nearly $2.5 trillion USD in bonds now in issue. Index-linked bonds have become a widely accepted part of the set of instruments that sovereign debt managers use for funding purposes and so the question of how to assess their cost effectiveness relative to other financing options is of increasing importance. This paper sets out a methodology for conducting such an analysis, the rationale behind it and ways in which such an approach could be further developed. Classification-JEL: G11; G32; H63 Keywords: financial risk management, government bonds, risk hedging, risk return, treasury securities Creation-Date: 2013-08-01 Number: 7 Handle: RePEc:oec:dafaaf:7-EN Template-type: ReDIF-Paper 1.0 Author-Name: Lerzan Ülgentürk Title: The role of public debt managers in contingent liability management Abstract: Contingent liabilities are major sources of fiscal risks due to the uncertain financial commitments they involve. Their effective management, therefore, is essential for increasing stability and predictability in public finance. This paper explores the role of public debt managers in contingent liability management based on the results of a background OECD survey and the information provided by seven task force countries. The results indicate that there are certain roles and responsibilities assumed by the public debt managers in this field, while the degree of involvement differs widely across countries. We also observed that the debt management offices’ (DMOs) involvement is more prominent in the management of government credit guarantees, while contingent liabilities arising from Public Private Partnerships (PPPs) and government sponsored insurance programmes appear to be outside the domain of public debt managers in most cases. Drawing on leading country practices and lessons from the past, this paper advises public debt managers on possible motives and areas of involvement. Classification-JEL: G18; H63; H81 Keywords: contingent liabilities, fiscal risk, government credit guarantees, government insurance programmes, public debt management, public private partnerships Creation-Date: 2017-02-02 Number: 8 Handle: RePEc:oec:dafaaf:8-EN Template-type: ReDIF-Paper 1.0 Author-Name: Pedro Cruz Author-Workplace-Name: Portuguese Treasury and Debt Management Agency Author-Name: Fatos Koc Author-Workplace-Name: OECD Title: The liquidity buffer practices of public debt managers in OECD countries Abstract: This paper summarises and discusses results from a survey of the liquidity buffer practices of debt managers in OECD countries. It includes detailed information on their purpose, cost, level and investment. Where possible and relevant, comparisons are made with the results of an earlier survey conducted in 2011. Country case studies for Denmark, Portugal and Turkey provide a deeper insight into liquidity buffer practices.While the level, investment, transparency and other governance features vary, the survey results show that keeping a liquidity buffer is a common practice among debt management offices in OECD countries. Sovereign debt managers view a liquidity buffer as an effective tool to address re-financing risk and liquidity risk that may arise for reasons such as, unexpected increases in borrowing needs, short-term mismatches in fiscal cash flows or the temporary loss of market access. Classification-JEL: G11; H63; H68 Keywords: cash management, liquidity risk, Public debt management, refinancing risk Creation-Date: 2018-11-26 Number: 9 Handle: RePEc:oec:dafaaf:9-EN